Glencore : agrees to acquire 49% interest in Hunter Valley Operations

27 July 2017

Glencore has signed agreements with Yancoal Australia Limited (Yancoal) regarding the acquisition of a 49% interest in the Hunter Valley Operations (HVO) coal mine in NSW and form a Joint Venture (JV) following Yancoal's acquisition of Coal & Allied (C&A) from Rio Tinto.

Glencore will pay cash consideration of US$1,139 million plus a 27.9% share of US$240m non-contingent royalties over five years and 49% of price contingent royalties payable by Yancoal to Rio Tinto on production from HVO in respect of the C&A acquisition.

Glencore will acquire a 16.6% interest in HVO directly from Yancoal and the companies will work together to acquire Mitsubishi Development Pty Ltd's 32.4% interest in HVO to achieve Glencore's 49% stake. Glencore will be entitled to its share of the profits of HVO from the date that Yancoal completes its acquisition of C&A.

Glencore has also agreed to subscribe for US$300m worth of shares in Yancoal's equity raising.

The transaction will be funded from Glencore's existing cash resources and committed facilities and is subject to Glencore obtaining the necessary regulatory approvals. Glencore expects the transaction to close within six months.

Joint venture:

The HVO JV will be jointly controlled by Glencore and Yancoal through a joint venture management committee comprising three representatives of both JV participants. An independent management team will run the operations on a day-to-day basis and will report to the committee.

In order to deliver maximum operational synergies, Glencore will nominate the candidates for HVO General Manager while Yancoal will nominate the candidates for HVO Financial Controller. Glencore will provide operational and support services to the HVO JV.

Marketing Agreements:

Glencore will be the exclusive marketing agent for HVO coal sales into Japan, South Korea and all other countries excluding China, Taiwan (with certain exclusions), Thailand and Malaysia.

Strategic rationale:

HVO is a large-scale, long-life and low-cost coal mine producing premium quality export thermal coal and semi-soft coking coal. HVO lies adjacent to a number of existing Glencore mines in the Hunter Valley.

The addition of 49% of HVO to our existing portfolio in the Hunter Valley will unlock mining and operating synergies. Glencore's combined portfolio of mines in the Hunter Valley, including HVO, will have production capacity of 69 million tonnes per annum of high quality energy coal to meet increasing Asian demand.

For further information please contact:

Investors
Martin Fewings
t: +41 41 709 2880
m: +41 79 737 5642
martin.fewings@glencore.com

Media
Charles Watenphul
t: +41 41 709 2462
m: +41 79 904 3320
charles.watenphul@glencore.com

Francis De Rosa
m: +61 417 074 751
francis.de.rosa@glencore.com

Cass McCarthy
m: +61 439 178 151
cass.mccarthy@glencore.com

www.glencore.com

Notes for Editors

Glencore

Glencore is one of the world's largest global diversified natural resource companies and a major producer and marketer of more than 90 commodities. The Group's operations comprise around 150 mining and metallurgical sites, oil production assets and agricultural facilities.

With a strong footprint in both established and emerging regions for natural resources, Glencore's industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries.

Glencore's customers are industrial consumers, such as those in the automotive, steel, power generation, oil and food processing sectors. We also provide financing, logistics and other services to producers and consumers of commodities. Glencore's companies employ around 155,000 people, including contractors.

Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the International Council on Mining and Metals. We are an active participant in the Extractive Industries Transparency Initiative.

Glencore's coal business in Australia

Glencore is one of Australia's largest coal producers with 13 mining complexes - including 17 operational mines - across New South Wales and Queensland.

We employ 7,500 Australians and in 2016 managed the production of nearly 93 million tonnes of thermal and coking coal, predominantly for export.

In NSW, we operate 11 coal mines that last year produced more than 54 million tonnes of saleable thermal and coking coal.

We have a strong safety and environmental performance and play an active role in the development of low emission coal technology.

For more information, please visit www.glencore.com.au

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Disclaimer
The companies in which Glencore plc directly and indirectly has an interest are separate and distinct legal entities. In this document, 'Glencore', 'Glencore group' and 'Group' are used for convenience only where references are made to Glencore plc and its subsidiaries in general. These collective expressions are used for ease of reference only and do not imply any other relationship between the companies. Likewise, the words 'we', 'us' and 'our' are also used to refer collectively to members of the Group or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies.