AMCI circles South32’s Eagle Downs project

Eagle Downs had been earmarked for a $1.5bn coking coal development under the watch of South32, but the Australian listed miner has opted to instead offload the development. Picture: Bloomberg

Private equity firm AMCI is being tipped as a likely buyer of South32’s Eagle Downs project that is up for sale through Macquarie Capital.

Others potential buyers include Bowen Coking Coal, run by former Stanmore Coal boss Nick Jorss, along with high-net-worth individuals scouring the landscape for opportunities to turn projects into production swiftly.

The thinking is that Eagle Downs could sell for a price tag of about $120m.

The Queensland project had been earmarked for a $1.5bn coking coal development under the watch of South32, but the Australian listed miner has opted to instead offload the development as part of a move to distance itself from the commodity.

The mining major announced it would not pursue development of the coking coal mine project earlier this year, saying returns from the joint venture with Chinese steel giant Baowu did not stack up for further investment.

Yet coking coal prices have surged.

The mine is based 25 kilometres southeast of Moranbah in Queensland’s Bowen Basin.

South32 purchased half of the Eagle Downs coking coal project from Brazil’s Vale in 2018, paying $US106m ($148m) upfront and agreeing to deferred payments worth another $US27m.

The mine was partially built by its previous owners, but mothballed in 2015 when coal prices fell and a major contractor went bust.

Baowu acquired its 50 per cent stake through the $1.4bn takeover of Aquila Resources in 2014.

At the time of the takeover Aquila said it would cost about $1.5bn to complete development of the mine.

A feasibility study on Eagle Downs suggests it is a low cost operation producing high quality coal.

It tips average production of 5.2 million tonnes of low volatile hard coking coal from an underground mine, at an average operating cost of about $71 a tonne – which puts it in the lowest quartile of coking coal mines on a cost basis.