Glencore, Apollo Bid for Rio Tinto’s $1.5 Billion Coal Assets

  • Whitehaven, South32, EMR Capital set for second round of sale
  • Sale includes the Valeria and Winchester South coal projects

Glencore Plc and a group led by Apollo Global Management LLC are among bidders set to be shortlisted for the sale of Rio Tinto Group’s last remaining coal mines, which may fetch more than A$2 billion ($1.5 billion), people familiar with the matter said.

Whitehaven Coal Ltd. and South32 Ltd. also made indicative offers for the Hail Creek and Kestrel mines by the deadline this month, the people said, asking not to be identified because the information is private. The parties, which also include EMR Capital Advisors Pty, are preparing to enter the second round of the sale process, which will include management presentations and site visits, before deciding on final bids, the people said.

A sale would allow Rio, the world’s second-biggest miner, to complete its exit from coal and continue an asset divestment program that has returned more than $7 billion since 2013. This year it agreed to sell $2.69 billion of Australian mines to a company controlled by China’s Yanzhou Coal Mining Co., and Chief Executive Officer Jean-Sebastien Jacques said in September that a rebound in metals and energy prices has opened a window for additional sales.

Representatives for Rio Tinto, Whitehaven, EMR Capital and Glencore declined to comment. A spokesman for South32 said the company continues to focus on identifying new opportunities outside its portfolio, in an emailed response to Bloomberg queries. He declined to comment on the Rio assets.

Apollo Bid

New York-based Apollo is bidding with Xcoal Energy & Resources LLC and Canada Pension Plan Investment Board, the people said. A representative for Xcoal Energy didn’t respond to Bloomberg queries, while Apollo and CPPIB declined to comment.

Rio Tinto controls 82 percent of Hail Creek in the Bowen Basin region of Queensland state. The mine can produce as much as 10 million metric tons of coal a year, according to the firm’s website. It owns 80 percent of Kestrel, which produced 5 million tons of coking and thermal coal in 2016.

The sale process, being run by Credit Suisse Group AG, also includes the Valeria and Winchester South coal projects in Queensland state, people familiar with the matter said in October. A representative for Credit Suisse declined to comment.

Rio Tinto shares rose 1.3 percent in London by 8:06 a.m. local time and touched the highest since mid-November. Glencore added 0.4 percent.

Rio Tinto in September boosted estimates of coal reserves at Kestrel by 62 million tons to 185 million tons, according to an exchange filing. The Valeria project is a semi-soft coking coal and thermal coal deposit close to Kestrel, while Winchester South is a coking coal asset in central Queensland.

Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director at Glencore.

— With assistance by Joe Ryan

Published by Bloomberg News