Rio Tinto (LON:RIO) has confirmed it has received an offer from Glencore to buy the mining giant’s Australian coal business, sparking a bidding war with China-backed Yancoal.
The group in January said it was selling its Coal & Allied subsidiary to Yancoal Australia for US$2.45bn but Glencore has jumped in with an offer of US$100mln more.
Glencore, which already owns mines near the Coal & Allied assets in New South Wales, said it would also buy Mitsubishi’s minority stakes in some of the mines for US$920m if Rio accepts the takeover offer.
“The Rio Tinto board and management will give the proposal appropriate consideration and respond in due course,” the company said in a statement today.
Glencore’s proposal will be subject to Australian regulatory approval while Yancoal has already been given the go-ahead for its deal by Australia’s Foreign Investment Review Board.
Yancoal currently operates several mines across Australia, including in NSW.
Glencore operates 18 open-cut and underground coalmines in Australia and said the Rio purchase would “unlock large-scale mining and operating synergies”. It would take Glencore’s production capacity in the area to 81 million metric tonnes a year.
“Glencore’s combined portfolio of mines in the Hunter Valley would have production capacity of 81m tonnes per annum of high-energy coal that feeds increasing Asian demand for high-efficiency, low-emission coal,” Glencore said.
Rio is offloading its coal mines in Australia amid falling prices and market volatility.