Glencore PLC (LON: GLEN) is paying US$1.7bn to buy Rio Tinto PLC’s (LON:RIO) Hail Creek coal mine and the Valeria coal project in Australia, further expanding its operations down under.
The latest acquisition follows the FTSE 100-listed miner and commodity trader’s purchase of half of Rio Tinto's Hunter Valley coal operations in Australia for US$1.1bn last year in a deal with China's Yancoal Australia Ltd.
READ: Glencore posts “strongest-ever” full-year performance, with underlying earnings just above forecasts
Glencore is already the world's biggest exporter of thermal coal used for power stations, and Hail Creek will give it a bigger stake in metallurgical coal used for steelmaking.
The latest purchase consists of Rio's 82% interest in the Hail Creek operating mine and its 71.2% interest in the Valeria project,
The remaining 18% of Hail Creek is owned by units of Nippon Steel and Sumitomo Metal Corp, Marubeni Corp and Sumitomo Corp, which all have rights to sell their stakes to Glencore, which it said in a statement would cost up to US$340mln.
Rio Tinto made a strategic decision in 2017 to exit coal and focus on growth in iron ore, copper and its aluminium division, and it said it was still looking to sell its remaining Australian coal assets.
The blue-chip miner said it planned to use the sale proceeds "for general corporate purposes". In a separate statement today, Rio Tinto also said it will use some of its surplus liquidity to further reduce gross debt, launching a bond purchase and redemption plan for up to US$2.25bn.
In late afternoon trading, Rio Tinto shares 1.3% higher at 3,658.p, while Glencore shares were up 0.6% at 371.3p.