• 7 hours What will happen with Venezuela's oil sector? Privatization needed?
  • 18 hours What happened to stocks yesterday?
  • 10 hours Here we go! Oil Heads Up To $74 a Barrel, But U.S. Bonds, Crude Supply Cast A Pall
  • 6 hours Yemen's Rebels Step Up Attacks on Aramco Oil Facilities
  • 3 hours Saudi Arabia Looks To Raise $10bn In Privatization Scheme
  • 17 hours China's Yuan Oil Contracts: No Liquidity, but It Will be Built
  • 1 day Wind, solar deliver stunning 98 percent of new U.S. power capacity in January, February
  • 16 hours China Has The Ultimate Population Control Weapon
  • 3 hours Comprehensive List of Factors that affect crude oil price
  • 12 hours Electric Buses are Eating into Oil Demand
  • 14 hours Large-Cap Oil Earnings: What to Watch
  • 1 day API Inventory Data (Tuesdays)
  • 17 hours Trump's top energy adviser resigns
  • 20 hours Trump Warns Iran Against Restarting Nuclear Program
  • 15 hours Most Likely Fossil Fuel Future
  • 18 hours Russia retaliate: Our Response to U.S. Sanctions Will Be Precise And Painful

Breaking News:

Hess Posts Lower-Than-Expected Q1 Loss

Alt Text

The Death Of Europe’s Coal Industry

A recent report suggests that…

Alt Text

Why China Can’t Shake Its Coal Dependency

China’s drive to reduce its…

Alt Text

Why China’s Shale Boom Is Struggling

China’s shale revolution has received…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Trending Discussions

Does This $2.5B Bidding War Signal A Resurgence For Coal?

coal shipping

The past year’s big run in coal prices is fading. With rates for benchmark products like Australian thermal recently sagging to $80/tonne — after a rise that took that commodity above $110/t in late 2016.

But a massive M&A deal this week shows that coal is far from dead. With one of the world’s biggest mining companies unveiling a $2.5 billion bet on a comeback for this space.

The firm is Glencore — which announced late Friday an offer to acquire Rio Tinto’s coal assets in New South Wales, Australia. Representing one of the biggest potential acquisitions the coal industry has seen in a long time.

Here’s the deal: Glencore is offering to pay Rio a full $2.05 billion up front. Then an additional $100 million yearly for five years — bringing the total transaction value to $2.55 billion.

And that’s where the story gets even more interesting.

That’s because Glencore’s offer is actually a counter-bid. Coming after Chinese coal miner Yancoal made an offer for the Rio Tinto coal assets this past January.

At that time, Yancoal had offered Rio $2.45 billion for the Aussie mines. But the buy-out contract stipulated that Rio could consider other deals, if those offers came at a higher value than the Yancoal bid.

Glencore apparently mulled its options for the past five months — and then stepped in with an 11th-hour bid that does indeed have a higher price tag. Meaning Rio now could legally take that offer, killing the Yancoal deal.

The next moves will be very telling. With Yancoal allowed to increase its offer in order to keep the deal alive — a move the company said overnight it is now considering. Related: Which Top 3 Polluter Dominates Wind And Solar?

If a counter does come, we could see a bidding war here. Signalling that good coal assets are still very much in demand from some of the world’s biggest mining firms.

And even if Yancoal bows out to Glencore, the big dollars coming under that deal will be a reassurance for the global coal sector. Watch for announcements from Yancoal on next steps, and for potential further counters from Glencore.

Here’s to dusting it off.

By Dave Forest

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment
  • Philip Branton on June 14 2017 said:
    Mr Forrest,

    Coal is a form of CARBON. If you research 3D Carbon nanotechnology printing and manufacturing, you may realize why coal is far more valuable than what is being reported.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News