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Ivan Glasenberg/Getty
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Ivan Glasenberg, Glencore's Xstrata Plc (Glencore) and Sumitomo Corporation (Sumitomo) jointly signed an agreement to acquire, on a 50: 50 basis, 50.1% stake of Rio Tinto in thermal coal mine Clermont (Clermont) in Queensland, Australia, for a little over US $ 1 billion in cash
Once the deal closes, Glencore will take over the operational management and marketing for the joint venture of Clermont and be paid management fees to do so.
In Japan the Fukushima nuclear power plant cleanup, which was crippled by the earthquake and tsunami in 2011, continues to deal with voluminous and insoluble Difficulty. It seems that the probability of significant discharges to water in irradiated nuclear ground offshore is now increasingly inevitable. The implication for the Japanese nuclear industry remains, then, as all its remaining nuclear power plants remain closed. Japan's population remains extremely cautious allowing them to reopen basically any of them until it can be reassured regarding their security.
As a result, renewed reliance on coal fired power becomes increasingly place the fall back and with this transaction clearly Japan Inc. is shoring up its strategic potential thermal coal supply and make sure that it won't be closed off by the Chinese markets which are also heavily consumers of thermal coal to fuel their expansion plans. Mitsubishi Corporation of Japan is also already a participant 31.4% in Clermont and a consortium of Japanese power companies owns the balance.
Given the fall in prices of thermal coal last year, the price represents a success for Rio Tinto than trying to download it for a while and now they got a good price. To Glencore that the deal can be viewed as a contrarian move, as in times of boom this good simply were not available and are in the business for the long haul.
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Thermal coal mine in Clermont (Clermont) in Queensland, Australia
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As Glencore merged with Xstrata this year didn't have to repair their balance-sheet is, unlike Rio Tinto itself that had gone too far in the previous M & mining arm. So it looks like a deal that makes everyone happy – which is the best kind.
Clermont is an open mine that produces important thermal high-energy coal with low ash. Is well capitalized, and efficient, producing 12 million tons per year, Australia's third largest thermal coal mine production. His ' JORC RESOURCE (mineral reserves reserves Committee joint) at the end of 2012 were about 172 million metric tons.
Mr Peter Freyberg, who heads the management activities of Glencore's coal, commented:
"We are pleased to be jointly acquiring a controlling interest in this mine with Sumitomo, joint venture partner for many years our other Queensland coal operations. Clermont is a low-cost mine large-scale offering an interesting financial return. In addition to being the third largest thermal of coal mine in Australia, Clermont is structurally low cost, with its sustained profitability since its report of life-of-mine low Strip 3.2: 1 [i.e. lower ratio of overburden to ore-ed], and the ability to bypass the 90% of coal without washing. "
"This investment is our focus on identifying high quality assets that complement our existing operations and marketing capacity. Going forward, we will further expand our relationship with Sumitomo where there are mutually beneficial opportunities. "
Mr. Toru Furihata, Senior Managing Executive Officer, Managing Director, mineral resources, energy, chemical & Electronics Business Unit of Sumitomo, for its part, commented:
"Sumitomo and Glencore have enjoyed a successful partnership for many years and we are delighted to expand this strategic relationship through the joint acquisition of Clermont, a high quality producing mine. We draw confidence from the mine operated by Glencore, given their strong track record of extracting maximum value from the resources of coal. We are very pleased to share joint control of the mine along with Glencore and we'll be happy to contribute to the stable supply of coal smoke, especially in the Asian region ".
Half the money for the acquisition will come from new funding to be provided by Australia and New Zealand Banking Group, on a basis of solute. The rest will be sent also by Glencore and Sumitomo. Subject to customary closing conditions and the necessary approvals, the purchase will close in early 2014.
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About Xstrata Glencore
Glencore is one of the largest global companies and diversified natural resources in the world. Glencore is a leader in integrated production and marketing of raw materials which seeks to grasp the value at every stage of the supply chain of natural resources. The Group has a global network of over 90 offices in more than 50 countries. It's industrial operations consist of more mining and metallurgical sites 150, offshore oil production goods, farms and agricultural structures.
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On Sumitomo Corporation
Sumitomo Corporation is a general trading company, headquartered in Tokyo, Japan, with 116 locations in 65 countries and 24 national positions. The Sumitomo Corporation group consists of nearly 800 companies and more than 70,000 staff and its business is expanding continuously in a diverse range of products and services.
Its core business units are metal products; Transportation construction systems &; & Environment of infrastructure; Lifestyle media, network, its goods & services; and mineral resources, energy, chemical & electronics.
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