Glencore's ambition of taking out rival Rio Tinto, or at least executing a joint venture of the two major's coal divisions in the New South Wales' Hunter Valley, has not waned with coal chief Peter Freyberg reiterating he is in the market for "synergy" deals.
Glencore wants to get its hands on Rio's iron ore business, and merge Rio's coal assets with its own.
In Melbourne on Thursday, Mr Freyberg said he was on the hunt for good "bolt-on" coal assets or "synergy" plays, but only at the right price.
On investor and analyst tours last year, Glencore executives made little secret of their frustration that Rio was not pushing ahead with negotiations over a thermal coal joint venture in the Hunter.
Mr Freyberg would not comment on Thursday if the rivals had revived talks, but pointed to the value of doing deals in the Hunter region, where "synergies" could cut costs.
"I can't talk about whether or not anything is happening with Rio Tinto ... what I can say is you would have seen we recently did a deal with a neighbour [Peabody Coal] over two adjoining leases. It was a deal that released a whole bunch of synergies between those properties and means going forward we can carry on mining at a lot lower cost. So we are open to value-adding opportunities when they present."
Buying history
The coal chief said Glencore had a history of building and buying assets at the "right time" in the commodity cycle.
"Right now we aren't looking at incremental build, however, we are looking at assets and opportunities to position ourselves for the future," he said.
Mr Freyberg also made a case for Glencore's marketing management and supply discipline – the miner said in February it would cut Australian coal output by 15 million tonnes this year, or more if the market outlook worsened.
When asked if his comments were a swipe at Australia's iron ore majors Rio and BHP and if they could "take a lesson" from what Glencore was doing in coal, he said the iron ore expansions had proved a "negative exercise".
"I think the numbers speak for themselves – you back a couple of years [to] 500 million tonnes at $US100 a tonne, suddenly [now] over 700 million at $US60 a tonne – there is a whole lot of revenue that has gone missing in the equation, following a bunch of investment. And at the end of the day, the returns into Australia – into superannuation funds, through royalties and taxes – it's been a negative exercise."
Rio's iron ore expansion has been Glencore chief executive Ivan Glasenberg's key weapon in his bold plan to merge with Rio to create the world's largest miner. The Rio board unanimously rejected Mr Glasenberg's formal approach in August last year, but he was widely expected to return for another crack.
'An understanding'
When Mr Freyberg was asked for his position on the argument that if Australia's major iron ore producers had not expanded and did not continue to do so, global competitors would simply expand in their place, he did not respond directly. Instead, he said, Glencore focused on its own business and "has an understanding" of "whether or not our next investment is going to cannibalise our own revenue – and that's how we run it".
"The market doesn't need all this coal," he told a Melbourne Mining Club luncheon in Melbourne on Thursday.
"Simply put, our decision to remove volume is the responsible thing to do. We will not push incremental tonnes into markets that don't want them or need them, doing so would force prices down further."
Glencore putting its $7 billion Wandoan coal project in Queensland on hold, "is a case in point", he said.
It "was the right thing to do by our shareholders and the rest of the Australian thermal export market".
Source: Australian Financial Review
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