Deal not a bad idea
With all the talk of coal being dead as an energy source, Glencore has offered to buy Australian Coal & Allied Industries from Rio Tinto for $2.675bn in cash. This may seem odd and many have called it out as a bad idea. But the reality is that while coal usage may be reducing, it is a very long way from dead and we’ll continue to use coal for decades to come. This plays to a comment I always make, which is that trends play out much slower and over longer periods than we ever expect. Think of the capture of our National Treasury. We were alerted to this in December 2015 when then finance minister Nhlanhla Nene was fired but it appears that the eventual process only played out in March this year, almost 16 months later.