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Glencore aims to raise as much as $1.1B by selling Australian coal train fleet

Glencore has put its Australian coal train fleet on the block, as part of its push to protect its balance sheet in the tough commodities environment.

The Switzerland-based commodities producer and trader hopes to fetch as much as A$1.5 billion ($1.1 billion) dollars for its GRail business, as it continues an aggressive debt-reduction program.

"Glencore is confident of fetching a sale price of above A$1 billion based on recent infrastructure sales in Australia," the company's Australian spokesman Francis De Rosa said.

The Hunter Valley rail business consists of nine trains, which move coal from mines in New South Wales to port operations on Australia's eastern seaboard.

Reports suggest Glencore will offer its trains to buyers with a contract that guarantees 40 million tons of carriage per year, but it's unclear if any potential offers have been made for the highly strategic asset.

Glencore hopes to complete a transaction by the end of the third quarter.

Glencore, which produces and trades more than 90 commodities, has been hit hard by a global downturn in the sector.

After Glencore reported a $5 billion net loss in 2015, chief executive Ivan Glasenberg was forced to accelerate a major review of the company's operations, in a move to restore investor confidence in one of the world's largest diversified natural resource companies after a market scare over its debt load.

In Glencore's 2015 annual report, Glasenberg said the financial performance in 2015 reflected the company's exposure to lower commodity prices.

"Financial market sentiment weakened during 2015 and the focus in our sector quickly switched from cash distribution to cash preservation," he said.

"During H2 2015, it became apparent that financial markets were concerned about the group's level of financial leverage. We rapidly put in place a plan to address these concerns, culminating in the $10.2 billion debt reduction plan announced in September."

Reports suggest Glencore is on track with plans to reduce its major net debt load to between $17 billion and $18 billion this year from roughly $30 billion as of June last year. It's already undertaken a series of cost-cutting initiatives, and is looking to expand on its asset disposal agenda to combat a potentially prolonged downturn in commodities.

Market confidence in Glencore's abilities to tackle its debt has seen its shares rally by almost 60 percent in the year to date. The stock traded up 4.72 percent in Hong Kong.

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