By Troy Kippen
January 10, 2018 - One of the biggest producers of metallurgical coal in the US could soon own one of the world's largest metallurgical coal mines in Australia's Bowen Basin.
Coronado Coal Group has agreed to the purchase of Curragh coal mine for $700 million.
Wesfarmers Curragh coal mine
The purchase will also spell the end of Wesfarmers interest in coal mining in the Bowen Basin.
Under the agreement of the sale, Wesfarmers will receive 25% of Curragh export coal revenue generated above a revitalized metallurgical coal price of $145 per tonne for two years.
Wesfarmers Managing Director Rob Scott said the agreement to sell Curragh follows Wesfarmers' disclosure last year that it was evaluating all strategic options for the Resources business with a view to maximizing shareholder value.
"We believe this agreement with Coronado is in the best interests of our shareholders, while giving the employees and customers of Curragh the opportunity to work with a leading coal producer with ambitions to expand in Australia,” Scott said.
Curragh was acquired by Wesfarmers for approximately $200 million in 2000, when it was producing 4.5 million tonnes of metallurgical and thermal coal. On disposal of the asset, the investment will have delivered an after-tax internal rate of return of approximately 49 percent per annum over its 17 year life.
The sale is subject to a number of conditions precedent including obtaining approval from the Foreign Investment Review Board.
Curragh is one of the world's largest metallurgical coal mines, with baseline production of 8.5 million tonnes per annum (mtpa) of export metallurgical coal and 3.5 mtpa of steaming coal which is sold to the Queensland Government's Stanwell Corporation.
Coronado Coal Group is a leading US producer of metallurgical coal with three mining complexes in West Virginia and Virginia currently producing 8.2 mtpa.