Glencore snaps up Rio Tinto’s Hail Creek coal mine and project for $1.7bn

Rio Tinto CEO Jean-Sebastien Jacques wants the company to withdraw from the coal market. (Reuters)
Updated 21 March 2018
0

Glencore snaps up Rio Tinto’s Hail Creek coal mine and project for $1.7bn

SYDNEY: Glencore is buying Rio Tinto’s Hail Creek coal mine and the Valeria coal project in Australia for $1.7 billion, tightening the Swiss trading and mining giant’s grip on coal as its rivals exit the industry.
The acquisition, announced by both companies on Tuesday, follows Glencore’s purchase of half of Rio Tinto’s Hunter Valley coal operations, also in Australia, for $1.1 billion last year in a deal with China’s Yancoal Australia.
Glencore is already the world’s biggest exporter of thermal coal used for power stations, and Hail Creek will give it a bigger stake in metallurgical coal used for steelmaking.
“You’ve got one of the few big companies, in Glencore, that is both willing and able and clearly likes coal strategically and has been acquiring these assets,” said Paul Gait, an analyst at Bernstein in London.
The sale consists of Rio’s 82 percent interest in the Hail Creek operating mine and its 71.2 percent interest in the Valeria project, the company said in a statement.
Rio Tinto made a strategic decision in 2017 to exit coal and focus on growth in iron ore, copper and its aluminum division.
On Tuesday it said it was still looking to sell its remaining Australian coal assets — the Kestrel coking coal mine and the Winchester South development project. Investors had expected the two mines and projects to be sold as a package.
“The best option to extract value for our shareholders is to go in a piecemeal approach,” Rio CEO Jean-Sébastien Jacques told reporters after a business event in Melbourne.
Analysts said the price for Hail Creek and Valeria looked good for Rio Tinto while not too expensive for Glencore.
“Given we all expected a $2 billion to $2.5 billion number for Hail Creek plus Kestrel and the other stuff, it’s a pretty big number,” said Shaw and Partners analyst Peter O’Connor in Sydney.
Gait said that he was bullish on metallurgical coal prices, now above $200 a ton, which would help justify the price Glencore agreed to pay.
“Glencore clearly have synergies in terms of both the operating and, physically, the marketing of these assets and when I look at the price that they’ve acquired these things for, it doesn’t seem to me to be exorbitant,” he said.
Rio Tinto said it planned to use the sale proceeds “for general corporate purposes,” however Jacques did not rule out returning the cash to shareholders
in future.
“You shouldn’t draw any conclusions. The next time we review it will be in August,” he told reporters, referring to the company’s next moves on capital management.
UBS has forecast that the sale of Hail Creek and Kestrel could help Rio hand back more than $9 billion to shareholders over the next 12 months.
The Hail Creek deal is subject to regulatory approvals and is expected to be completed in the second half of 2018, Rio said.
The remaining 18 percent of Hail Creek is owned by units of Nippon Steel and Sumitomo Metal Corp, Marubeni Corp. and Sumitomo Corp, which all have rights to sell their stakes to Glencore, which it said in a statement would cost up to $340 million.
Glencore declined to comment further on the acquisition.


Twitter triples first-quarter profit to $191 million

Updated 23 April 2019
0

Twitter triples first-quarter profit to $191 million

  • Profits in the first quarter hit $191 million, compared with $61 million a year earlier
  • The longstanding metric of monthly active users was 330 million in the January-March period

WASHINGTON: Twitter said Tuesday its profits tripled in the past quarter even as it ramped up efforts to root out abuse and misconduct on its short messaging platform.
Profits in the first quarter hit $191 million, compared with $61 million a year earlier, while revenues increased 18 percent to $787 million.
Twitter’s global user base appeared to show modest growth even as the company transitions to a different way of measuring it.
The longstanding metric of monthly active users was 330 million in the January-March period, an increase of nine million from the past quarter but down slightly from a year ago.
But Twitter no longer will use that measure, switching instead to “monetizable” daily active users — 134 million in the past quarter, up from 120 million last year.
Chief executive Jack Dorsey said Twitter is benefiting from its moves to root out abusive and inauthentic content that had hurt Twitter’s reputation.
“We are taking a more proactive approach to reducing abuse and its effects on Twitter,” said Dorsey.
“We are reducing the burden on victims and, where possible, taking action before abuse is reported.”
He added that Twitter aims to become “more conversational” and has launched a prototype for a new app called “twttr,” with the goal of “making conversation on Twitter feel faster, more fluid and more fun.”