Chinese majority-owned Yancoal added another $240 million in unconditional guaranteed royalty payments to its cash offer of $2.45 billion.

The Rio board considered both of the latest offers and backed Yancoal’s improved offer to its shareholders based on greater transaction certainty and higher net present value.

One of the problems facing the Glencore bid is the need for the giant Swiss commodities trader to get approvals from several jurisdictions, including Australia and China. 

Rio Tinto chief executive Jean-Sebastien Jacques said: “The revised offer from Yancoal of $2.69 billion offers compelling value to our shareholders for our Australian thermal coal assets. 

“This sale process has been in progress for a long period of time and we believe it is in the best interests of our shareholders to take the greater certainty of Yancoal’s strong proposal.”

According to Yancoal chairman Xiyong Li Yancoal has also received NSW government approvals required for the transaction.

“Yancoal continues to provide Rio Tinto with the certainty of approvals and funding required to facilitate the efficient and timely sale of the Coal & Allied assets in support of Rio Tinto’s global strategic growth,” he said.

Yancoal CEO Reinhold Schmidt said: “The acquisition of Coal & Allied will establish Yancoal as the largest independent pure-play coal producer within Australia and provide greater competition and opportunity across established global markets”.

Yancoal has also increased the break fee amount provided by its parent company, Yankuang, from $100 million to $225 million.