A group of investors, including U.S. buyout firm Apollo Global Management and Canada Pension Plan Investment Board (CPPIB), is bidding for coal assets put up for sale by global mining giant Rio Tinto Group, which could fetch US$2 billion, sources familiar with the matter told Reuters.
The sale, run by Credit Suisse, of the Kestrel and Hail Creek coking coal mines is part of Rio’s planned exit from Australian coal to focus on iron ore, copper and aluminum. Interested parties have been invited to submit tentative offers by a December 8 deadline.
Apollo and CPPIB have joined forces with U.S. coal company Xcoal Energy & Resources and a former Glencore executive to bid for the assets, two sources said.
They added that Anglo American had expressed an interest, but the deteriorating outlook for met coal, whose third-quarter contract price fell by five percent, might deter it from making a formal bid in December. Australia’s Whitehaven Coal was also likely to put in an offer, one of the sources said.
Rio Tinto has just completed the sale of its Australian Coal & Allied thermal coal unit to China-backed Yancoal Australia for US$2.69 billion.
Rio is viewed as having the strongest balance sheet in the sector, with little debt and a mounting cash pile from its low-cost iron ore operations and possibly more asset sales.
Rio, Anglo American and Whitehaven Coal declined to comment. Apollo, XCoal Resources, and the CPPIB were not immediately available to comment.
(Reporting by Clara Denina and Barbara Lewis in London; Additional reporting by James Regan in Sydney; Editing by Mark Potter)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
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