Glencore would kick tyres at Total Coal SA

[miningmx.com] – GLENCORE Xstrata said it would consider buying the coal mines held in Total Coal SA, but a final decision to bid for the assets would turn on whether they met the group’s hurdle rates.

“Total is looking at disposing its assets. We will look at it if it has got the right internal rates of return. Any assets that come up for sale we will look at. If it meets the hurdle rates, we will do it,” said Ivan Glasenberg, CEO of the Swiss-headquartered group.

However, Glasenberg stopped short of fuelling speculation that Glencore Xstrata might have a similar level of interest in South African coal mines owned by BHP Billiton.

“Whether BHP will want to sell any [coal] assets in South Africa, I don’t know. I have been hearing that for five years, but I’ve never heard it from BHP,” Glasenberg said.

Glasenberg was responding to questions following publication of the group’s full-year figures in which it posted adjusted net income of $3.67bn, up from $3.06bn.

On a pro-forma basis, Glencore Xstrata’s adjusted net income fell 23% to $4.58bn – a performance that exceeded Citigroup’s $4bn estimate and which it was quoted to have said in a Bloomberg News article was an “exceptionally strong’ result.

The destiny of BHP Billiton’s coal assets in South Africa, which are held in BHP Billiton Energy Coal South Africa (Becsa) has been the subject of discussion for years with the latest speculation turning on its attempt to sell its Khutala colliery.

The sale was frustrated, possibly be Eskom, as the power utility would be wary of the colliery ending up in hands where the long-term future supply of coal might be put into doubt, an analyst told Miningmx.

As for Total Coal SA, it said its decision to sell its coal mines – the Forzando and Dorstfontein collieries in South Africa’s Mpumalanga province – was on the basis they were non-core, and was not a divestment from the country.

In addition to the coal mines, Total Coal SA also has about 4% of export entitlement through Richards Bay Coal Terminal (RBCT). It exported 4.5 million tonnes through the terminal last year.