Rio Tinto on Tuesday said it was sticking to a recommendation of China-backed Yancoal as the preferred buyer of its Coal & Allied division in Australia, rejecting a counter-offer from Glencore . Miner-trader Glencore earlier this month said it had offered $2.55 billion cash for coal mines owned by Rio Tinto, outbidding a previous offer from Yancoal. Rio said in a statement it had reviewed additional information, including confirmation of Yancoal’s funding plans, confirmation from Yancoal concerning regulatory approvals and improved terms. “We believe Yancoal’s offer to purchase our thermal coal assets for $2.45 billion offers the best value and greater transaction certainty for shareholders,” Rio Tinto Chief Executive J-S Jacques said in a statement. “The sale of Coal & Allied will create outstanding value for shareholders and is consistent with our strategy of simplifying our portfolio to ensure the most effective use of our capital.”
Rio Tinto said Yancoal had agreed to accelerate deferred payments and pay a coal price-linked royalty. It said the offer could be completed in a more timely manner than Glencore’s bid of $2.55 billion, plus a royalty.Rio said Glencore had not secured clearance from various jurisdictions, including the Australian, Chinese, South Korean and Taiwanese authorities. Rio Tinto general meetings have been convened for June 27 and 29 for Australian and British shareholders to vote on the proposed deal, which Rio said it expected to be completed in the third quarter of the year.