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Rio Tinto confirms Yancoal as preferred buyer of Coal & Allied

Published by
World Coal,

The Rio Tinto board has confirmed its recommendation that shareholders vote in favour of the sale of Rio Tinto’s wholly-owned subsidiary Coal & Allied Industries Ltd (C&A) to Yancoal Australia Ltd (Yancoal).

The recommendation follows consideration by the board of a revised offer from Glencore plc (Glencore) received on 23 June 2017, and a revised offer from Yancoal received on 25 June 2017 comprising further improved terms. In summary, Yancoal’s most recent offer includes:

  • Total consideration of AUS$2.69 billion, comprising AUS$2.45 billion in cash payable in full on completion, as well as AUS$240 million via unconditional guaranteed royalty payments of which AUS$200 million will be received before the end of 2018.
  • An increased break fee amount provided by Yancoal’s parent company, Yankuang, from AUS$100 million to AUS$225 million.
  • The receipt or waiver of all regulatory approvals required to close the transaction.

The board has considered both of the latest offers and is recommending Yancoal’s improved offer to its shareholders based on greater transaction certainty and higher net present value.

Rio Tinto Chief Executive J-S Jacques said: “The revised offer from Yancoal of $2.69 billion offers compelling value to our shareholders for our Australian thermal coal assets. This sale process has been in progress for a long period of time and we believe it is in the best interests of our shareholders to take the greater certainty of Yancoal’s strong proposal.”

Under the UK Listing Rules and ASX Listing Rules, the transaction with Yancoal requires the approval of Rio Tinto shareholders and accordingly the Rio Tinto plc general meeting will take place on 27 June 2017 and the Rio Tinto Limited general meeting will take place on 29 June 2017.

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