Glencore to Purchase Hail Creek Coal Mine in Australia

Glencore has reached an agreement to acquire Rio Tinto’s 82% interest in the Hail Creek coal mine and adjacent coal resources, as well as its 71.2% interest in the Valeria coal resource in central Queensland, for $1.7 billion. The remaining 18% of Hail Creek is currently owned by Nippon Steel Australia Pty Ltd. (8%), Marubeni Coal Pty Ltd. (6.67%) and Sumisho Coal Development Pty Ltd. (3.33%). Each joint venture partner has the right to sell its share to Glencore through a “tag-along” right with respect to this transaction, which could result in additional consideration of up to $340 million.

Hail Creek is a large-scale, long-life and low-cost mine producing two-thirds premium-quality hard-coking coal and one-third thermal coal for export. Located 120 kilometers (km) southwest of Mackay, Hail Creek produced about 9.4 million metric tons (mt) of coal, which was exported through the Dalrymple Bay Coal Terminal. Hail Creek has resources of 794 million mt with proven and probable reserves of 142 million mt.

The Valeria thermal coal deposit is located 265 km west of Rockhampton and 67 km southeast of Glencore’s Clermont managed coal operation. It has resources of 762 million mt.

The acquisition is subject to regulatory approvals and is expected to be completed in the second half of 2018.

Last year, Glencore produced more than 87 million mt of coal from 17 mines in Queensland and New South Wales.