Glencore sells Australia coal rail unit for $874 million
Mining and trading giant Glencore (LON:GLEN) is selling its coal haulage business in Australia’s Hunter Valley for A$1.14 billion ($874m) to US railroad company Genesee & Wyoming as part of its ongoing efforts to reduce debt.
With the sale of Glencore Rail, or GRail, the Swiss group is only a step away from meeting chief executive Ivan Glasenberg’s target of $5bn in assets sales in 2016, as it takes this year’s deals to $4.7 billion.
The price obtained exceeds the company’s earlier target of A$1 billion for the coal haulage business, which is Australia’s third-biggest.
Under the deal, expected to close on Dec. 1, GW Australia will service Glencore’s coal transport requirements in the Hunter Valley for 20 years.
Set up in 2010, when existing services were inefficient and costly, GRail currently hauls around 40 million tonnes a year of Glencore’s coal production in the region to the Port of Newcastle, the world’s biggest coal-export hub.
The sale comes as Australian thermal coal — marker for the vast Asian market — is trading above $100 a tonne for the first since 2012.
Used to generate electricity in power stations, the commodity has doubled in value this year after China’s decision to limit coal mines’ operating days to 276 or fewer a year from 330 before as it seeks to restructure the industry.