• 5 minutes Drone attacks cause fire at two Saudi Aramco facilities, blaze now under control
  • 8 minutes China Faces Economic Collapse
  • 12 minutes Oil Production Growth In U.S. Grinds To A Halt
  • 14 minutes Iran in the world market
  • 17 minutes Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 5 hours USA Wants Iran War -- Shooty Shooty More
  • 25 mins Experts review drone damage . Say Saudis need to do a lot of explaining.
  • 10 hours Collateral Damage: Saudi Disruption Leaves Canada's Biggest Refinery Vulnerable
  • 10 hours Yawn... Parliament Poised to Force Brexit Delay Until Jan. 31
  • 41 mins Saudis Confirm a Cruise Missile from Iranian Origin
  • 6 hours The Spy Money: U.S. Wants To Seize All Money Edward Snowden Makes From New Book
  • 1 hour Aramco Production
  • 12 hours Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 3 hours Trump Will Win In 2020 And Beyond..?
  • 22 hours USA : Attack came from 'Iranian soil'. Pompeo to release 'evidence'.
  • 4 hours The Belt & Road Initiative: A Wolf in Sheep's Clothing?
Alt Text

India’s Coal Paradox

India is making a huge…

Dave Forest

Dave Forest

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

More Info

Premium Content

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

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:




Download The Free Oilprice App Today

Back to homepage



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
Download on the App Store Get it on Google Play