The fire at Anglo American’s Grosvenor coal mine throws a spanner in sale aspirations

Anglo American will reassess the timing of its coal asset sale process following the fire which continues to burn at its Grosvenor coal mine in Queensland.

The coal market has tightened after incidents in Queensland.

The fire at the Anglo American’s Grosvenor mine in Queensland, which started on the weekend, has cast doubt on the company’s sale process for its Australian coal assets with the mine not expected to reopen for “several months’’.

The proposed sale of the coal assets, estimated to be worth about $US5bn ($7.4bn), came after Anglo American fended off advances from BHP, with sources saying the company had wanted the deal wrapped up by the end of the calendar year.

Analysts are now querying whether Grosvenor will reopen at all, while Anglo American itself says it is currently focused on safely managing the incident.

“As we set out in May, we fully intend to divest our steelmaking coal business and we have received strong interest from a wide range of potential buyers,’’ the company told The Australian

“Following the incident at Grosvenor over the weekend, our first responsibility is to the safety and wellbeing of our workforce and local communities.

“The incident underground at Grosvenor is serious and it will take some time to assess the impact on the mine and implement remedial action.

“We will assess the timing of the divestment process in the coming weeks but we are continuing the preparation work in the meantime.’’

In a separate statement the company said the recovery process would take some time.

“The mine team is working with specialist teams from the Queensland Mines Rescue Service and the regulatory authorities to extinguish the underground fire prior to being able to assess the steps towards a safe re-entry into the mine,” Anglo said.

“These procedures are expected to take several months as a result of the likely damage underground.”

UBS analysts said in a note to clients this week that the future of Grosvenor was uncertain, given it was the second such incident at the mine, which closed for 16 months after an underground gas explosion in May 2020.

“Given the site’s history and challenges now looking forward with this second gas ignition event, Grosvenor’s future is uncertain,’’ UBS said.

Anglo American has been issuing updates via social media and on Wednesday released footage of a remote-controlled bulldozer sealing a 6m mine ventilation shaft at Grosvenor.

“With the seal of another shaft, smoke from Grosvenor continues to significantly reduce,’’ the company said.

Meanwhile a $300m convertible note offering for coal miner New Hope Corporation has been twice oversubscribed.

New Hope was offering $300m in senior unsecured notes due in 2029, with the book build completed before market open on Thursday.

Jefferies Australia was sole global co-ordinator and with Jarden Australia was joint lead manager.

The notes were paying a coupon of 3.75-4.25 per cent per year, payable semi-annually.

New Hope chief executive Rob Bishop said the company had grown and diversified since its inaugural convertible note issue in 2021.

“Capital raised will increase New Hope’s balance sheet flexibility supporting our strategy to maximise shareholder returns through disciplined operational management, cost control, production growth and capital management,’’ he said.

Originally published as The fire at Anglo American’s Grosvenor coal mine throws a spanner in sale aspirations