Mine workers have been told little should change for day-to-day operations as South32 buys the Metropolitan Colliery at Helensburgh from Peabody.
The $200 million deal, announced early on Thursday to the Australian Securities Exchange, is a lifeline for the Metropolitan operation and its workforce of 250 people, plus 125 contractors.
Its future had been clouded owing to Peabody’s bankruptcy problems in the US where it is based, and the once-drooping fortunes of the black coal market.
Much of Peabody’s $10 billion debt had been incurred by its Australian operations.
But with coal prices experiencing a resurgence on the back of boosted international steelmaking, South32 agreed to the deal.
Peabody said the sale was expected to have no impact on workers, staff or the community.
“This sale supports our actions to strengthen the Australian portfolio, which remains core to Peabody, and is consistent with the strategy outlined in our business plan,” chief executive Glenn Kellow said.
South32 will also acquire Peabody’s one-sixth share in the Port Kembla Coal Terminal, giving it double the stake of other shareholders.
South32, having recently completed deep cost-cutting at its Illawarra Coal metallurgical coal operations, had cash in hand and was ready for an acquisition.
“The Metropolitan Colliery is a natural fit within our portfolio and the acquisition is consistent with our strategy to invest in high quality mining operations where we can create value,” chief executive Graham Kerr said.
“The mine’s recently upgraded infrastructure and close proximity to Illawarra Metallurgical Coal will enable us to further optimise performance and unlock unique blending and resource synergies.
“We look forward to the Metropolitan team joining South32.”
The deal will need to be approved by the Australian Competition and Consumer Commission.
Peabody would also seek to free up about $20 million in cash and bank guarantees with the NSW Government under regulatory obligations such as rehabilitation bonds.
Under the deal, the companies would share in any increases in coal prices over the first year of production. The deal is expected to be completed early next year.
Coking coal has more than tripled in price this year, this week reaching a spot price above $US250 per tonne.