South32 shares rise on Illawarra business sale
Make us a preferred source
Make us a preferred source on Google
More news: South32 shares rose 3.72% by 3:04pm AEDT after the company agreed to sell its Illawarra Metallurgical Coal business for up to US$1.65 billion ($2.54 billion).
The business will be sold to a new joint venture owned by Singapore investment group Golden Energy (GEAR) and Matt Latimore’s M Resources.
South32 sells Illawarra coal business for up to $2.5b
The news: Mining giant South32 has agreed to sell its Illawarra Metallurgical Coal business in NSW to a new joint venture owned by Singapore investment group Golden Energy (GEAR) and Matt Latimore’s M Resources.
The numbers: The global miner will sell the Illawarra business for up to USD1.65 billion ($2.54 billion), including an upfront cash payment of USD1.05 billion and a deferred cash consideration of USD250 million payable in 2030. It could be paid another USD350 million based on the upside in prices for metallurgical coal, which is a key steel-making ingredient.
The context: South32 said the deal would unlock capital to invest in high quality development projects in copper and zinc. It would also reduce South32’s capital requirements, given Illawarra takes up a third of the group’s capital expenditure.
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.
The deal is subject to Illawarra’s key customer Bluescope Steel waiving its rights under any change of control. The assets will be acquired by GEAR M Illawarra Met Coal, with GEAR holding a controlling 70% stake.
The source: ASX announcement
