(The author is a Reuters Breakingviews columnist. The opinions...

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Pete Sweeney HONG KONG, June 12 (Reuters Breakingviews) - Glencore thinks it can push Yancoal <1171.HK> around. The Swiss-based miner and commodity trader is trying to shove aside the Chinese state-owned firm's slow-moving purchase of assets from Rio Tinto (RIO) with a $2.6 billion cash counter-bid - $100 million over Yancoal's not-quite-financed offer. Glencore is betting, probably correctly, that Yancoal has thin political support and weak financial firepower.

The state-controlled, Australian-listed Yancoal (YAL) has been trying to acquire Rio’s Australian unit, Coal & Allied Industries, since January. But it has been slow work solidifying the financing for its $2.5 billion bid. That delay, plus the lack of immediate approval from China’s central government, signalled weakness. Yancoal responded on Sunday by announcing it has received regulatory approval for the deal, but by then it was too late: Glencore had already pounced.

Coal & Allied is a tasty morsel. Its mines produce premium thermal coal, most of which is exported to power stations in Japan at an above-average price around $85 per tonne. Yet cash costs, even for its less efficient mines outside the Hunter Valley, are only about $60 to $65 per tonne, according to Jefferies estimates. It helps too, that the mines are close to existing Glencore properties. There will be some synergies too. These will not be huge - Jefferies estimates these at less than $50 million per year – but that does mean Glencore can afford to pay more and still create value.

This is just the latest acquisitive move by a newly reinvigorated Glencore, which has taken a stake in Russia’s Rosneft , bought out a partner in the Democratic Republic of Congo and last month it made an informal approach to Bunge , the U.S. listed grain trader. Yet it is telling that Glencore did not immediately enter the fray in January, though it has coveted the mines next door for some time. It can be a bruising experience to get into a bidding war with a state-backed Chinese player, especially if the counter-bidder also has extensive business interests in China.

Should Rio’s board recommend Glencore's offer, Yancoal has the right to make a fresh bid of its own. So Rio Tinto could yet secure a higher price. Yet Yancoal’s progress to date suggests Glencore may be fighting a paper tiger.

On Twitter http//twitter.com/petesweeneypro

CONTEXT NEWS - Glencore, the London-listed miner and commodity trader, on June 9 gatecrashed an agreed deal for Rio Tinto to sells its coal mines in Australia’s Hunter Valley, offering $100 million more than China’s Yancoal.

- On June 11, Yancoal said it had gained Chinese regulatory approval for the $2.45 billion purchase of the unit, Coal & Allied Industries Ltd, following up on a deal first announced in January. Yancoal's purchase has also been approved by Australia's Foreign Investment Review Board and South Korea's Fair Trade Commission.

- Glencore has offered $2.55 billion in cash for the assets. Rio Tinto is obliged to give Yancoal the opportunity to counter Glencore's bid.

- For previous columns by the author, Reuters customers can click on [SWEENEY/]

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China's Yancoal gets regulatory approval for $2.45 bln Rio Tinto 

deal Yancoal stock filing http://www.hkexnews.hk/listedco/listconews/SEHK/2017/0611/LTN20170611067.pdf Glencore outbids Yancoal for Rio Tinto's Hunter Valley coal mines BREAKINGVIEWS-Jump at Bunge shows Glencore has its M&A mojo back BREAKINGVIEWS-Chinese make bold coal bet on Rio Tinto leftovers

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