Yancoal to raise US$2.5b in equity for Rio Tinto asset purchase
SYDNEY: China-backed Yancoal Australia Ltd will raise US$2.5 billion (RM10.7 billion) in equity to fund the purchase of Rio Tinto Group’s Australian coal assets, with its parent Yanzhou Coal Mining Co tipping in US$1 billion.
Glencore Plc, which will jointly operate some of Rio’s Coal & Allied operations in the Hunter Valley with Yancoal, will contribute US$300 million. Two Chinese investment groups, China Cinda Asset Management Co and Shandong Lucion Investment Holdings Group Co, committed to a further US$1 billion in the entitlement offer.
“The strategic acquisition of Coal & Allied will redefine our position within the global coal marketplace and strengthen Yancoal Australia for the future,” Yancoal chairman Xiyong Li said in a statement yesterday.
The deal will catapult Yancoal into Australia’s largest pure-play coal producer and give it a stake in the owner of two terminals at the port of Newcastle, the country’s main conduit for thermal coal. It comes at a time when major consumers, including China, plan to curb use primarily due to environmental concerns.
Rio agreed to sell its Australian coal mines for US$2.69 billion to Yancoal, a unit of China’s staterun Yanzhou, in June after a protracted battle with Glencore. Rio chose Yancoal because its offer was seen as having less regulatory hurdles despite some uncertainty over its financing of the deal. On July 27, Glencore announced a surprise US$1.1 billion deal with Yancoal for a stake in the coal assets in Australia’s Hunter Valley.
Yancoal gained 2.6 per cent to 40 Australian cents at 11.45am here, after its shares were halted the previous four sessions. Bloomberg