OREANDA-NEWS. Glencore Xstrata Plc and Sumitomo Corporation have signed a binding agreement to acquire Rio Tinto's 50.1% interest in the Clermont thermal coal mine ("Clermont") in Queensland, Australia, for USD1,015 million in cash.

Through GS Coal Pty Ltd, a jointly controlled entity owned 50:50 by Glencore and Sumitomo, each company will hold a 25.05% effective economic interest in the mine. Upon completion of the deal, Glencore will assume Rio Tinto's role in relation to operational management and marketing for the Clermont joint venture, and will receive customary management fees.

Clermont is a large scale open cut mine producing high energy thermal coal with relatively low ash. It is fully capitalised and current saleable production is 12 million metric tonnes per annum, making it Australia's third largest thermal coal mine. Clermont has a first quartile margin position in the seaborne thermal coal market and exports primarily through the Dalrymple Bay Coal Terminal. Its JORC Reserves as at 31 December 2012 were approximately 172 million tonnes.

Australia and New Zealand Banking Group Limited will provide non-recourse debt finance to GS Coal to fund approximately half of the purchase price. The balance of the purchase price will be contributed equally by Glencore and Sumitomo.

The acquisition is subject to the terms of the Clermont Joint Venture documents, under which Mitsubishi Development Pty Ltd, J-Power Australia Pty Ltd and JCD Australia Pty Ltd hold pre-emptive rights. The acquisition is subject to customary closing conditions, including certain regulatory approvals, and is expected to close during the first quarter of 2014.