UK’s new coal mine sent ‘adverse international signal’, campaigners say
Environmental campaigners are challenging the approval of a coking coal mine in northwest England.
Australia’s South32 (ASX, LON, JSE:S32) has decided to ditch its $200 million planned acquisition of Peabody Energy’s coal mine in the eastern Australian state of New South Wales, which was the firm’s first major deal since spinning off from BHP Billiton (ASX:BHP) in 2015.
The company said it was unwilling to take the steps required to satisfy Australian steel makers to get the deal over the line, which means South32 is still looking to concrete its first major acquisition.
South32 said it was unwilling to take the steps required to satisfy Australian steel makers to get the deal over the line.
“To proceed with the acquisition, in light of the anticipated concessions, would have compromised the merits of the transaction and this is not something we are prepared to do,” chief executive Graham Kerr said in a statement.
The deal, announced in November, came under scrutiny from the national competition watchdog, the Australian Competition and Consumer Commission, on concerns voiced by steel makers that too much of Australia’s massive coking coal reserves rest in the hands of a few top miners such as BHP, Mitsui and Anglo American (LON:AAL).
South 32’s decision also comes just as Peabody Energy (NYSE:BTU), the world’s largest privately owned coal producer, emerged from bankruptcy earlier this month.
Commenting on the failed deal, the US coal miner’s President, Glenn Kellow, said he was surprised that South32 and Australia’s competition watchdog had reached an impasse over the deal.
“On the other hand, we see continuing opportunities given Metropolitan’s quality coking coals and port location, and our objective will be to operate the mine while maximizing returns in the international marketplace,” Kellow noted in the statement.
The St. Louis-based company said it would keep the 2 million tonnes a year coking coal mine and its almost 17% stake in the Port Kembla coal terminal and would resume shipments after completing a move to a new coal panel in the mine at the end of May.
