BlueScope clears way for South32’s sale of Illawarra coal business
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The news: BlueScope Steel has waived its pre-emption acquisition rights over South32’s Illawarra Metallurgical Coal business in NSW, clearing the way for its sale to a joint venture of Singapore investment group Golden Energy (GEAR) and Matt Latimore’s M Resources.
The numbers: BlueScope, a key customer for the coal business, said it has had strong engagement with GEAR and M Resources, who have agreed to a number of improvements to the long-term coal supply agreement, including a one-year extension of the contract until 2033, along with the commitment to undertake a detailed review process to support a potential extension of the supply beyond 2033.
The context: South32 announced the sale of the Illawarra business in February for up to USD1.65 billion ($2.54 billion), saying the deal would free up capital to invest in high quality development projects in copper and zinc. It will also reduce South32’s capital requirements, given Illawarra takes up a third of the group’s capital expenditure.
On Tuesday, the global miner said the transaction remains on track to be completed by the first half of FY25.
The Illawarra operations, which include the Appin and Dendrobium underground mines, West Cliff and Dendrobium coal preparation plants, as well as road and rail infrastructure, have been beset with maintenance and operational issues for years.
Under the coal supply agreement, the Illawarra business supplies BlueScope’s Port Kembla Steelworks with a blend of metallurgical coal from Appin and Dendrobium.
The sources: ASX announcement, ASX announcement
