• 3 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 5 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 9 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 minutes China's Blueprint For Global Power
  • 13 hours Science: Only correct if it fits the popular narrative
  • 6 hours Crazy Stories From Round The World
  • 12 mins EU has already lost the Trump vs. EU Trade War
  • 16 hours Iran Burning: Shock Gas Price Hike Triggers Violent Protests After Subsidy Cuts
  • 5 hours Impeachment Nonsense
  • 1 day Do The World's Energy Policies Make Sense?
  • 7 hours Everything You Need To Know About Trump
  • 1 day What are the odds of 4 U.S. politicians all having children working for Ukraine Gas Companies?
  • 2 days China's Renewables Boom Hits the Wall
  • 16 hours Atty General Barr likely subpeona so called whistleblower and "leaker" Eric Ciaramella
  • 2 days Forget out-of-date 'dirty oil' smear, Alberta moving to be world's cleanest oil industry
  • 2 days Water, Trump, and Israel’s National Security
  • 1 day Who writes this stuff? "Crude Prices Swing Between Gains, Losses"

Breaking News:

Russia Plans To Boost Crude Oil Exports

Alt Text

Coal Is Fueling China’s Data Center Boom

China’s data center sector is…

Alt Text

Investors Are Turning Their Back On Coal

Investors are increasingly looking away…

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