Glencore Sells Australia Rail Unit in Latest Deal to Cut Debt

SYDNEY—Glencore PLC has agreed to sell its coal-haulage business in Australia's New South Wales state to U.S. railroad operator Genesee & Wyoming Inc. for 1.14 billion Australian dollars (US$874 million), the latest deal by the company aimed at reducing its debt load.

Glencore last year had promised to sell operations to cut borrowings after a mounting debt pile and sagging commodities prices sent its shares tumbling. The company has since agreed to carve off parts of its operation including a 40% stake in its agricultural business, which it sold to Canada's largest pension fund, Canada Pension Plan Investment Board, for US​$2.5 billion in cash. ​

"The sale of the GRail business forms another significant part of Glencore's debt-reduction program," the Swiss commodities trader and mining company said in a statement Thursday.

Glencore said that after the deal is completed Genesee & Wyoming, based in Darien, Conn., would manage much of Glencore's coal-transport in Australia's Hunter Valley region under a 20-year contract.

GRail, also known as Glencore Rail, currently hauls about 40 million metric tons of its parent company's coal output from mines in the Hunter Valley to the Port of Newcastle, the world's biggest coal-export hub, each year.

​"We established GRail in 2010 and have steadily grown it to become the third largest coal haulage business in the country," said Peter Freyberg, head of Glencore's global coal assets. "It has played a very important role in reducing costs and improving the overall efficiency of Australia's largest coal chain in the Hunter Valley."

The deal will need approval by Australia's foreign-investment regulator, the company said.

Genesee & Wyoming already has operations in Australia, including running more than 3,000 miles of track in South Australia state and the Northern Territory, according to its website.

Write to Rhiannon Hoyle at [e-mail]

(END) Dow Jones Newswires

October 20, 2016 04:05 ET (08:05 GMT)

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