China-based Yanzhou Coal Mining has cleared its subsidiary Yancoal Australia’s move to divest a 16.6% stake of the major assets of Rio Tinto's Coal & Allied unit.
The transaction will be subject to its completion of the $2.69bn acquisition of the Australian coal business of mining giant Rio Tinto.
Yanzhou had confirmed the same through a filing on the Hong Kong stock exchange, saying that its board had given the nod to let Yancoal to divest a 16.6% stake in Hunter Valley Operations (HVO).
A coal mine joint venture, HVO is presently owned 67.6% by Coal & Allied and 32.4% by Mitsubishi Development, a subsidiary of Japan-based Mitsubishi. HVO is located in the Hunter Valley region in New South Wales, 24km from Singleton in the north-west direction.
The multi-pit open cut mine HVO had reported production of over 13 million tonnes in 2015.
As per a report in The Australian, Swiss miner Glencore is closing on acquiring a 49% stake in HVO which includes a 16.6% stake from Yancoal and the remainder from Mitsubishi.
Last month, shareholders of Rio Tinto had voted in favour of the divestiture of Coal & Allied to Yancoal while rejecting a $2.55bn counter bid offered by Glencore.
Originally, Yancoal had offered a price of $2.45bn which was further improved by $240m to beat Glencore’s bid. As per the revised offer, Yancoal will pay $2.45bn in cash upon closing of the transaction, while the remainder amount will be paid in the form of unconditional guaranteed royalty payments.
Rio Tinto said that it chose Yancoal as the preferred buyer of its Australian thermal coal assets as the deal with the Chinese-backed company would have greater chances of securing regulatory approvals.
Image: Yancoal Australia gets approval from its Chinese parent to sell 16.6% stake in key assets of Coal & Allied. Photo: courtesy of dan/FreeDigitalPhotos.net.