Rio Tinto and Glencore consider spin-off of coal assets in a potential $200 billion merger. Glencore's coal operations contribute 8% of the combined group's $45.6 billion EBITDA. Assets worth tens of billions; could be listed on ASX.
Rio Tinto Plc (NYSE: RIO) and Glencore Plc (OTC: GLCNF) are considering spinning off their coal assets, a move necessitated by the challenges in merging their diverse portfolios and investor bases. This separation would likely take the form of a separately listed Australian entity as part of a $200 billion merger deal. Glencore's coal operations contribute around 8% to the combined group's $45.6 billion EBITDA, indicating their significant standalone value amounting to tens of billions of dollars. These assets are situated in regions like New South Wales, Queensland, central Africa, and Latin America, showcasing strong cash flow generation capabilities. The companies are exploring options to list the coal assets on the ASX as a potential solution to ensure broader institutional investor support.