Deal not a bad idea

Finweek English Edition - - MARKETPLACE SIMON SAYS -

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.

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