Glencore will buy Rio Tinto’s majority stake in the Hail Creek coal mine and adjacent coal resources, as well as its 71.2 per cent interest in the Valeria coal resource, for $2.2 billion (US$1.7 billion).

The remaining 18 per cent of Hail Creek is currently owned by Nippon Steel Australia, Marubeni Coal, and Sumisho Coal Development.

Each joint venture partner has the right to sell its share to Glencore through a “tag-along” right, which could result in additional consideration of up to $441 million (US$340 million).

The Hail Creek mine is located 120km south-west of Mackay and in 2017 produced about 9.4 million tonnes of coal for export from the Dalrymple Bay Coal Terminal.

The Valeria thermal coal deposit is located 265km west of Rockhampton and 67km south-east of Glencore’s Clermont coal operation.  It has JORC resources of 762 million tonnes.

Glencore’s coal business managed the production of more than 87 million tonnes of saleable coal last year from 17 operational mines in Queensland and New South Wales.