Insight
Glencore continues coal acquisition spree in $1.7 billion deal with Rio Tinto
Report summary
Glencore announced it had agreed to purchase Rio Tinto's 82% interest in the Hail Creek coal mine and 71.2% interest in the Valeria thermal coal project in Queensland for US$1.7 billion in cash. Assuming a zero valuation for the Valeria project, we estimate the deal was struck at a 41% premium to our valuation of Hail Creek. We estimate consideration payable results in a deal-implied long-term real 2018$ benchmark export hard coking coal and thermal coal prices of US$146/tonne (FOB Qld) and US$83/tonne (FOB Newcastle) respectively.
Table of contents
- Overview
- Deal summary
- Hail Creek
- Valeria
- Deal Analysis
- Strategic rationale, upside and risks
Tables and charts
This report includes 15 images and tables including:
- Deal summary
- Location map
- Marketable reserves (as at 1 July 2018)
- Hail Creek coal export sales by coal type and destination FY17 (million tonnes)
- Metallurgical coal sales share FY17 (%)
- Thermal coal sales share FY17 (%)
- Summary valuation
- Valuation metrics
- Economic assumptions
- Deal implied prices move higher on recovery in metallurgical coal prices
- Thermal deal implied prices also moving higher
- Glencore Australian pro-forma production profile - metallurgical coal
- Glencore Australian pro-forma production profile - thermal coal
- Seaborne metcoal margin curve 2018
- Seaborne thermal coal margin curve 2018
What's included
This report contains:
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