07 Nov South32 swoops for Peabody coal asset
South32 (ASX, LSE, JSE:S32) has completed a US$200 million purchase of Peabody Energy’s Metropolitan Colliery in New South Wales, Australia.
The Australian-based BHP Billiton spin-off, which had been on the hunt for new assets to add to its portfolio for some time, added that the deal includes a 17% stake in the Port Kembla Coal Terminal near Sydney.
Metropolitan is an underground mine that has a capacity to generate 2.3 million tonnes of coal a year. It’s located only 10km east of South32’s Appin Colliery mine.
South32 CEO Graham Kerr said: “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.
“The mine’s recently upgraded infrastructure and close proximity to Illawarra metallurgical coal will enable us to optimise performance and unlock unique blending and resource synergies.”
A South32 statement added that the agreed off includes a mechanism where Peabody, once the world’s largest coal company before filing for bankruptcy in April, will share commodity price upside in the first year of production.