The Daily Telegraph

Glencore ups the ante as it raises bid for Rio’s Australian coal mines

- By Jon Yeomans

GLENCORE has stepped up the bidding war for Rio Tinto’s Australian coal mines by returning with a higher offer.

The Switzerlan­d-based mining group said it would offer $2.68bn (£2.1bn) in cash, payable in one lump sum, for Rio’s Coal & Allied business in New South Wales. This represents an advance on the $2.55bn it offered earlier this month and is considerab­ly more than the $2.45bn offered by Yancoal, the Chinese-backed miner that is Rio’s preferred buyer.

Glencore, led by billionair­e Ivan Glasenberg, has coal mines adjacent to Rio’s operations in the Hunter Valley, and believes it can make substantia­l savings by joining the two businesses together. Earlier this week Rio said it would stick with Yancoal’s offer, first made in January, because it had already gained regulatory approvals for the deal.

However, Glencore said yesterday it was confident of securing the same approvals and would be willing to forfeit a $225m deposit if the deal did not go through. The company believes it is in a strong position because it already has clearance from Japan, the biggest customer of Hunter Valley coal.

As a further sweetener, it has offered to let Rio keep the cash flows from the business until the deal completes.

“We believe the Glencore offer satisfies the criteria for a ‘superior proposal’,” the company said. Glencore’s determinat­ion to buy Coal & Allied stems from its confidence that Japan and other Asian countries will continue to need large supplies of coal even as the world looks for greener sources of energy.

Mr Glasenberg’s move will also pile pressure on Rio’s boss, Jean-sébastien Jacques, to accept a deal that is fully funded. By contrast, doubts persist as to whether debt-laden Yancoal can secure finance for the deal. Rio had already convened two extraordin­ary general meetings next week in London and Sydney to approve the sale to Yancoal. It needs shareholde­r approval because the deal counts as a related party transactio­n, as both Rio and Yancoal are part-owned by companies backed by the Chinese state. Rio has until the end of Monday to respond to the offer.

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