LONDON • Rio Tinto Group backed an improved offer by China’s Yanzhou Coal Mining Co for its Australian coal mines, snubbing a last-minute bid from Glencore plc.

Shareholders should vote for the US$2.45 billion (RM10.51 billion) proposal from Yancoal for the Coal & Allied unit in New South Wales, according to a statement from Rio Tinto yesterday. Even though the price is lower than Glencore’s US$2.55 billion bid, Rio Tinto said the likelihood of regulatory approval and funding certainty made Yancoal a better choice.

“It is not surprising that Rio Tinto feels that the Yancoal offer will likely close quicker than Glencore’s,” wrote analysts at BMO Capital Markets in a research report. “Missing out may be a little disappointing for Glencore, which will remain in the hunt for alternative transactions.”

The deal is the first major sale of an operating asset under Rio Tinto’s new CEO Jean-Sebastien Jacques. Yancoal, which is 13% owned by Asian commodity trading giant Noble Group Ltd, said in January that the acquisition would make it Australia’s largest pure-play coal producer.

On June 9, Glencore made a surprise bid for Rio Tinto’s assets, which are near its own mines in the Hunter Valley, the region north of Sydney that supplies the world’s biggest coal export harbour at Newcastle. Yancoal responded by strengthening its offer — choosing a single US$2.45 billion payment, instead of paying a portion in annual installments.

“Our offer provides certainty of execution, having already achieved all key international regulatory approvals,” Yancoal said in a separate statement yesterday. “In comparison, the Glencore bid remains subject to material regulatory risk.”

Yancoal received outbound investment approval from China’s National Development and Reform Commission and the Ministry of Commerce, as well as merger clearance from the nation’s Anti-Monopoly Bureau.

Yankuang Group Co, Yancoal’s biggest shareholder, provided financial assurances for the deal, the company said.

A spokesman for Glencore said the company plans to review Rio’s statement and may respond later.

Rio Tinto shareholders will vote on the deal this month and the company expects the sale to be completed in the third-quarter. — Bloomberg