Glencore and Apollo bid for Rio coal mines

Whitehaven Coal and South32 among those vying for US$1.5bil assets

MELBOURNE: 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$2bil (US$1.5bil), sources said.

Whitehaven Coal Ltd and South32 Ltd also made indicative offers for the Hail Creek and Kestrel mines by the deadline this month, the sources said, asking not to be identified because the information is private. The parties, which 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 sources said.

A sale would allow Rio, the world’s second-biggest miner, to complete its exit from coal and continue an asset divestment programme that has returned more than US$7bil since 2013. This year it agreed to sell US$2.69bil 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 out- side its portfolio, in an emailed response to Bloomberg queries. He declined to comment on the Rio assets.

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

Rio Tinto controls 82% of Hail Creek in the Bowen Basin region of Queensland state. The mine can produce as much as 10 million tonnes of coal a year, according to the firm’s website. It owns 80% of Kestrel, which produced five million tonnes of coking and thermal coal in 2016. The sale process, being run by Credit Suisse Group AG, includes the Valeria and Winchester South coal projects in Queensland state, sources said in October. A representative for Credit Suisse declined to comment.

Rio Tinto in September boosted estimates of coal reserves at Kestrel by 62 million tonnes to 185 million tonnes, according to an exchange filing. The Valeria project is a semisoft 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.