* Glencore meets asset sales target for 2016
* Sale puts it on track to meet debt cutting target
* G&W doubles its Australian business (Adds Glencore, G&W comments, adviser)
Oct 20 (Reuters) - Mining and trading giant Glencore Plc GLEN.L agreed on Thursday to sell its Australian coal haulage business GRail to Genesee & Wyoming Inc GWR.N for A$1.14 billion ($874 million), advancing its effort to slash debt.
Genesee & Wyoming, which will sell down 49 percent of the business to funds managed by Macquarie Infrastructure and Real Assets (MIRA), beat Australia's top two coal haulers, Aurizon Holdings AZJ.AX and Pacific National, in the bidding.
"We are very pleased with the outcome of the sale process and look forward to continuing our constructive working relationship with Genesee & Wyoming in the years ahead," Glencore's coal head Peter Freyberg, said in a statement.
The price Glencore fetched was in line with expectations, and takes its asset sales this year to $4.7 billion, within its target range, putting it on track to cut net debt to between $16.5 billion and $17.5 billion this year.
Genesee & Wyoming, which already operates GRail for Glencore, said the acquisition would double the size of its Australian business and boost its earnings before interest, tax, depreciation and amortisation in 2017 by A$100 million.
"We are pleased to be enhancing our existing relationship with Glencore through a two-decade rail haulage contract that provides for exclusive rights to rail shipments from some of the premier steam coal mines in the world," G&W President Jack Hellman said in a statement.
Earnings from GRail, which hauls about 40 million tonnes a year of coal, are expected to grow to A$150 million in the medium term, backed by its long-term contract with Glencore, G&W said.
The deal is expected to close on Dec. 1, assuming G&W wins approval from Australia's Foreign Investment Review Board.
Rival bids from Aurizon and Pacific National, Australia's dominant coal haulers, had sparked concerns with Australia's competition watchdog, which said it would welcome a third competitor in the Hunter Valley. It was due to rule on their bids in December.
A source familiar with the deal said G&W's bid was higher than the other two.
Glencore was advised by RBC Capital Markets.
($1 = 1.3038 Australian dollars)