Appears that the new owners of S32 coal mine are driving down the price of met coal to get cash flowing. Plus Chinese controlled Yancoal may buy more Aussie mines. from today's OZ:
Bids in for Anglo American’s $US4bn coal mines. Bridget Carter Bridget Carter8 hours ago.Updated 8 hours agoThe Australian Business Network
First round offers went in for Anglo Amercian’s Australian metallurgical coal mines at the start of the week, but the buyers of South32’s Illawarra metallurgical coal business could be playing more of a part in the outcome than some might suspect.The price for metallurgical coal has fallen from $US330 a tonne on January 1 to about $US180.
The talk in the market is that the new owners of South32’s Illawarra coal asset have made the decision to sell a substantial amount of metallurgical coal into the market at a lower price to get cash through the door.The asset was purchased by Golden Energy Resources and M Resources for $US1.65bn at the start of the year and the transaction was finalised on August 29 in what was considered a top result for South32.The move to sell the coal more cheaply being partially blamed for the price coming off in Australia, according to one expert, which may mean suitors of Anglo American’s Queensland coal mines are willing to pay less.
However, this was also compounded by the weaker economy in China, the world’s largest coal consumer.Apparently, Anglo American’s advisers, Goldman Sachs and Morgan Stanley, have cast the net wide when it comes to finding a buyer for the portfolio, with talk that 24 parties signed non-disclosure agreements to access confidential information about the portfolio.But it’s likely a number of those would be smaller groups unable to buy the entire portfolio, which Anglo American is keen to sell in one line.
One possibility is that Anglo American may be open to hiving off the Jellinbah mine near Bluff in Queensland to its joint owners, which include Marubeni Resources and Sojitz Development with 15 per cent each.Anglo American owns an interest in Jellinbah with billionaire Sam Chong.This is unlikely to be an asset that the main suitors are going to be relaxed about not getting their hands on, and it makes sense for its joint venture owners to simply increase their holding.
Glencore is known to be a keen buyer of the whole Anglo American portfolio, while the Australian listed Yancoal, which is 62 per cent owned by Chinese state-owned Yankuang Energy, has suspended dividends to provide more firepower for mergers and acquisitions.It is known to be keen and is working with advisers Citic CLSA and RBC.Stanmore Coal is also thought to be interested in at least the Grosvenor and Moranbah North assets, which were next to its Poitrel mine.A wild card is Adani, along with Peabody Energy, which may bid for part of the portfolio.Coronado Global Resources, Whitehaven Coal and BHP are not participating.
Earlier, price expectations in the Goldman Sachs and Morgan Stanley-run competition were about $US5bn ($7.5bn), but that was before a fire broke out at the Grosvenor mine at Moranbah, about 1000km northwest of Brisbane, causing its closure, and now it’s thought to be worth about $US4bn.On offer for the suitors that have been assessing the opportunity in a data room are Anglo American’s Capcoal and Dawson assets, and its most attractive mines, Moranbah North and Grosvenor.
Should the portfolio be split up, the major players could pick up Moranbah North and Grosevnor, Jellinbah could go to co-owners while others take Capcoal and Dawson.For 2023, Anglo American’s steelmaking coal operations generated 15 million tonnes of coal, equating to $1.3bn of earnings before interest, tax, depreciation and amortisation.It is targeting the production of about 20 million tonnes per annum at a unit cost of about $US100 a tonne by 2026.Anglo American announced a company break-up while fending off BHP’s advances, leading to some of the best coal mines in the world – which sat within its portfolio – being put on the market.
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