Mining giant Glencore is planning to sell its Hunter Valley rail business in Australia. The assets comprise nine trains with a guaranteed 40 million tons of coal haulage. The mining major is aiming to raise $1.31 billion to settle its debts, which have been estimated as $33.9 billion in September 2015.
Glencore is Australia’s largest thermal coal producer with an annual output of 98 million tons. It forayed into rail business in 2010 after finding fault with freight operators who ferried coal to the ports. Rival BHP Billiton also entered the rail business the same year, reports World Coal.
The potential buyers for Glencore rail business could include Aurizon, Pacific National, and US-based Genesee & Wyoming.
Glencore Train (GTrain) has been carrying 70 percent of its production, according to a submission made to National Competition Council. GTrain hauls 40 million tonnes of coal annually, reports The Australian Financial Review. Glencore has already exported 51 million tons of coal from its Hunter Valley operations.
Among the suitors, Genesee & Wyoming is looking to expand its Australian presence. It owns the rail line between Adelaide and Darwin and is into coal hauling business in North America and the UK besides metallic ores transport in Australia.
Meanwhile, Glencore’s deal with and Tegeta Exploration & Resources owned by Gupta family in South Africa has sparked allegations of nepotism.
Glencore sold Optimum coal complex to Tegeta for $180 million after the operation went bankrupt. Tegeta is controlled by the Gupta family and the group is said to be close to President Jacob Zuma.
The deal has been questioned by South Africa’s ruling party officials, who alleged that Mines Minister Mosebenzi Zwane favoured the Gupta family.
African National Congress Secretary-General Gwede Mantashe sought more clarity on the deal. Zwane reportedly held a meeting with Glencore Chief Executive Officer Ivan Glasenberg before the deal was announced.
“The involvement of the minister remains a big issue,” Mantashe said. “We need to get more information on the deal.”
Zwane said he met Glasenberg to “engage” with Tegeta to save jobs at Optimum and denied having favoured the Guptas.
Oakbay Investments, a company owned by the Guptas, also denied the charge that Zwane had lobbied for them, IOL News reported.