BlueScope has told the consumer watchdog it is worried about potential price rises if South32 is allowed to buy Helensburgh’s Metropolitan Colliery from Peabody.
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The Australian Competition and Consumer Commission is investigating South32’s planned purchase after concerns were raised about the impact of the deal on the coking coal market in the Illawarra.
The $200 million deal agreed to in November now rests on the ACCC’s decision, to be made after a period of consultation.
BlueScope told the Mercury it had detailed its concerns to the ACCC in recent months.
“In recent years, BlueScope has made significant progress in resetting its cost base at the Port Kembla Steelworks in order to be an internationally competitive manufacturer of steel,” a company spokesman said.
“Anything that jeopardises this reset cost position is obviously of concern to BlueScope.
“As a direct result of South32’s proposed acquisition of the Metropolitan colliery, BlueScope is concerned about the lessening of competition which would likely have the effect of increasing coal prices for the majority of our coking coal requirements.
“As such, we have provided a confidential submission to the ACCC outlining these concerns.”
Coking, or metallurgical, coal is vital for steelmaking and BlueScope buys much of its coal from South32 and Peabody’s Illawarra mines.
“Australian customers of coking coal appear to benefit from competition between South32 and Metropolitan.
“The proposed acquisition would remove this competitive rivalry and, in the medium term, is expected to result in a single supplier of material volumes of coking coal from the Illawarra region, which is the closest source of coking coal to Australian customers.
“The ACCC’s preliminary view is that this may substantially lessen competition in the supply of coking coal to Australian customers.”
BlueScope is concerned about the lessening of competition
- BlueScope statement
The ACCC is untroubled by South32’s proposed purchase of Peabody’s 16.67 per cent share in the Port Kembla Coal Terminal. The terminal had been owned on an equal shares basis between the region’s coal producers.
South32 said it would “engage with the ACCC” on the review process. A decision was expected on April 6.