The ERM acquisition of a stake in MEL was part of a larger strategy that included EGO and a direct holding of exploration assets. They really wanted to have and own sources of gas supply so that they could become a wholesaler of gas. They are a user of gas in their power-stations but the fully owned one is really only a peak demand one - so not a regular user of gas runs about 1% per year.
They found it very difficult to break into the end-user supply and i think have let a trial just muddle along.
The strategic redirection came when they failed to get some of the NSW Electricity assets. They have stopped any further power-station development plans and have decided to expand rather into the USA in electricity wholesaling - much like the local model.
Whilst I do concede that they are not explorers they have a good understanding of the supply market and I think wanted to partner with the likes of Alcoa and EGO to make good partnership - the rest is history.
They would sell their equity I think for other reasons as they dont see this as core anymore.
Mel was a passive investment and they made that clear - EGO was supposed to be the same. MEL can hurt their electricity relationships with NSW government and I think they just dont need the stress. I think they were very active JV partners here and I think they do have an understanding needed to be a passive investor.
