Commodities giant Glencore has agreed to buy a 49 per cent stake in the Hunter Valley Operations coal mine, a month after missing out on the assets in a sale by Rio Tinto.
Glencore says it will pay $US1.14 billion ($A1.43 billion) plus a 27.9 per cent share of non-contingent royalties worth $US240 million over five years and 49 per cent share of price-contingent royalties that are payable by Yancoal to Rio Tinto on production from the mine.
In return, Glencore will directly acquire a 16.6 per cent stake from Yancoal Australia and a 32.4 per cent interest from Japan's Mitsubishi Development, which is a joint venture partner in the assets.
Glencore will also subscribe to shares worth $US300 million in Yancoal's equity raising to fund the Coal & Allied acquisition.
Yancoal in June sealed a $US2.69 billion deal to buy Rio Tinto's NSW coal operations, trumping Glencore after a surprise bidding war for the assets.
The Coal & Allied business includes majority stakes in the Hunter Valley Operations and the Mount Thorley Warkworth mine, plus a 36.5 per cent interest in the Newcastle Port coal export terminal.
Yancoal's majority shareholder, Chinese state-owned Yanzhou Coal Mining Company, on Thursday told investors on the Hong Kong stock exchange the stake sale would reduce the overall funding commitment required and boost the financial position of its Australian subsidiary.
The deal is also expected to generate operational synergies as the Hunter Valley mine lies adjacent to Glencore's existing operations.
Glencore will be the exclusive marketing agent for Hunter Valley coal sales into Japan, South Korea and all other countries except China, Taiwan, Thailand and Malaysia.
It will also provide operational and support services and get the right to nominate candidates for the mine's general manager, while Yancoal will nominate candidates for financial controller.
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