Sydney — Yancoal Australia said Thursday that it had made a $710 million tag along offer -- a contractual obligation used to protect a minority shareholder -- to Mitsubishi Development for its share of the Hunter Valley Operations coal joint venture as part of its plan to buy Rio Tinto's Coal & Allied Industries Ltd.
It "fulfils Yancoal's obligation to make a tag along offer to Mitsubishi under the sale and purchase agreement for Yancoal's acquisition of 100% of the shares in Coal & Allied Industries Limited from wholly owned subsidiaries of Rio Tinto Limited and the corresponding requirements of the Hunter Valley Operations joint venture agreement," Yancoal said.
Rio Tinto agreed to sell the Hunter Valley thermal coal business to Yancoal in January this year for $2.45 billion.
Coal & Allied owns a 67.6% interest in the Hunter Valley Operations complex as well as an 80% interest in the Mount Thorley mine and a 55.6% stake in the Warkworth mine, and a 36.5% share in the Port Waratah Coal Services export terminal at Newcastle port as well as other undeveloped assets.
Mitsubishi Development owns the remaining 32.4% of the Hunter Valley Operations joint venture.
Mitsubishi has until June 23 to accept the offer, Yancoal said.
"The binding offer is another important milestone in the strategic acquisition of Coal & Allied and sends a clear message to all stakeholders of Yancoal Australia's continuing investment in the local resources sector," Yancoal CEO Reinhold Schmidt said.
The Hunter Valley Operations and Mount Thorley Warkworth mines together produced 25.9 million mt of saleable thermal and semi-soft coking coal in 2016, with Rio Tinto's share totaling 17.1 million mt, the miner said.
The Coal & Allied transaction would make Yancoal Australia the largest independent coal producer in the country, it said.
--Nathan Richardson, email@example.com
--Edited by E Shailaja Nair, firstname.lastname@example.org