Glencore has reached agreement with Genesee & Wyoming Australia (GWA), a subsidiary of Genesee & Wyoming, to sell its Glencore Rail (GRail) coal haulage business in the New South Wales (NSW) Hunter Valley for AUS$1.14 billion.
Upon completion, GWA will service the majority of Glencore’s coal haulage requirements in the Hunter Valley via a 20-year contract for the haulage of our export coal to the Port of Newcastle.
GRail currently hauls approximately 40 million tpy of Glencore’s Hunter Valley coal production to the Port of Newcastle.
According to GWA, this will strengthen its nationwide footprint in Australia by adding a significant presence in the Hunter Valley coal supply chain in NSW complementing GWA’s existing intermodal, agricultural and mining business in South Australia and the Northern Territory.
Jack Hellmann, President and CEO of G&W, commented: “The acquisition of Glencore Rail solidifies GWA’s position as the most efficient rail operator with the highest service quality in the Australian rail market. Through the acquisition and 49% new equity issued to MIRA, we are effectively doubling the size of GWA and retaining 51% of a business with stronger long-term free cash flow and a significant portion of GWA’s rail shipments under long-term, take-or-pay contracts.”
Peter Freyberg, Head of Glencore’s Global Coal Assets, said: “We established GRail in 2010 and have steadily grown it to become the third largest coal haulage business in the country. It has played a very important role in reducing costs and improving the overall efficiency of Australia’s largest coal chain in the Hunter Valley. We are very pleased with the outcome of the sale process and look forward to continuing our constructive working relationship with Genesee & Wyoming in the years ahead.”
According to a company press release, the sale of the GRail business forms another significant part of Glencore’s debt reduction program.
The closure of the transaction is subject to FIRB approval. It expected to close on 1 December 2016, subject to Australian Foreign Investment Review Board approval.
Read the article online at: https://www.drybulkmagazine.com/rail-barge/20102016/glencore-sells-grail-coal-haulage-business-to-genesee-wyoming-australia/