Oct. 25, 2013
Glencore and Sumitomo to acquire majority interest in Clermont thermal coal mine
Glencore Xstrata Plc (“Glencore”) and Sumitomo Corporation (“Sumitomo”) have signed a binding agreement to acquire Rio Tinto’s 50.1% interest in the Clermont thermal coal mine (“Clermont”) in Queensland, Australia, for US$1,015 million in cash. Through GS Coal Pty Ltd, a jointly controlled entity owned 50:50 by Glencore and Sumitomo, each company will hold a 25.05% effective economic interest in the mine. Upon completion of the deal, Glencore will assume Rio Tinto’s role in relation to operational management and marketing for the Clermont joint venture, and will receive customary management fees.
Clermont is a large scale open cut mine producing high energy thermal coal with relatively low ash. It is fully capitalised and current saleable production is 12 million metric tonnes per annum, making it Australia’s third largest thermal coal mine. Clermont has a first quartile margin position in the seaborne thermal coal market and exports primarily through the Dalrymple Bay Coal Terminal. Its JORC Reserves as at 31 December 2012 were approximately 172 million tonnes.
Peter Freyberg, Head of Glencore’s Coal Assets, commented:
“We are pleased to be jointly acquiring a controlling interest in this mine with Sumitomo, a longstanding joint venture partner for our Queensland coal operations. Clermont is a large scale, low cost, producing mine offering an attractive financial return. As well as being Australia’s third largest thermal coal mine, Clermont is structurally low cost, with its through-cycle profitability underpinned by its low 3.2:1 life-of-mine strip ratio and the ability to bypass 90% of coal without washing.
“This investment epitomises our focus on identifying high quality assets that complement our existing operations and marketing capabilities. Going forward, we will seek to further expand our relationship with Sumitomo where there are mutually beneficial opportunities.”
Toru Furihata, Senior Managing Executive Officer, General Manager, Mineral Resources, Energy, Chemical & Electronics Business Unit of Sumitomo, commented:
“Sumitomo and Glencore have enjoyed a successful partnership over many years and we are pleased to expand this strategic relationship through the joint acquisition of Clermont, a high quality producing mine. We draw confidence from the mine being operated by Glencore, given their strong track record of extracting maximum value from coal assets. We are very pleased to share joint control of the mine together with Glencore and we look forward to contributing to the stable supply of steaming coal, especially to the Asian region.”
Australia and New Zealand Banking Group Limited will provide non-recourse debt finance to GS Coal to fund approximately half of the purchase price. The balance of the purchase price will be contributed equally by Glencore and Sumitomo.
The acquisition is subject to the terms of the Clermont Joint Venture documents, under which Mitsubishi Development Pty Ltd, J-Power Australia Pty Ltd and JCD Australia Pty Ltd hold pre-emptive rights. The acquisition is subject to customary closing conditions, including certain regulatory approvals, and is expected to close during the first quarter of 2014.
About Glencore Xstrata
Glencore Xstrata is one of the world’s largest global diversified natural resource companies. As a leading integrated producer and marketer of commodities with a well-balanced portfolio of diverse industrial assets, we are strongly positioned to capture value at every stage of the supply chain, from sourcing materials deep underground to delivering products to an international customer base. The Group’s industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries. Our diversified operations comprise over 150 mining and metallurgical sites, offshore oil production assets, farms and agricultural facilities. We employ approximately 190,000 people, including contractors.
About Sumitomo Corporation
Sumitomo Corporation is a leading general trading company, headquartered in Tokyo, Japan, with 116 locations in 65 countries and 24 domestic locations. The Sumitomo Corporation Group consists of nearly 800 companies and more than 70,000 personnel, and its business is continuously expanding into a diverse range of products and services. Its core business units are Metal Products; Transportation & Construction Systems; Environment & Infrastructure; Media, Network, Lifestyle Related Goods & Services; and Mineral Resources, Energy, Chemical & Electronics.