Aussie coal portfolio sale suggests Anglo asset break-up

There are global rules related to the concentration of ownership of coking coal mines among a small number of players.

The sale of Anglo American’s Australian coal portfolio is increasingly looking like a break-up play, after Brisbane billionaire Sam Chong exercised his option to buy the remaining stake in two coal mines ahead of other suitors.

As reported by The Australian, the Malaysian-born Mr Chong outlaid $1.6bn for the 33.3 per cent stake he did not already own in the Jellinbah East and Lake Vermont metallurgical coal mines. The mines are owned through his private vehicle Zashvin.

Now all eyes are on what happens to the rest of the portfolio, expected to sell for between $US2bn and $US3bn.

One scenario is Peabody Energy buying Anglo American’s Capcoal and Dawson assets, which are smaller mines, leaving Stanmore Coal and its backers to battle it out with Glencore for the prized Grosvenor and Moranbah North mines, while Yancoal bids for the whole portfolio.

The Yancoal offer faces two challenges: whether the group has official approval to bid from the Chinese government (Yancoal is 62 per cent-owned by the China state-owned Yankuang Energy), and Foreign Investment Review Board approval.

There are also strict global rules over concentration of ownership of coking coal mines among a small number of players to protect pricing for the steel industry, so others could face regulatory hurdles.

Glencore has the Teck Resources steelmaking coal mines in Canada. Glencore, Yancoal and Stanmore are the main global owners of premium low-volatility hard coking coal.

Anglo American put its steelmaking coal portfolio up for sale after fending off BHP’s takeover overtures earlier this year.

Most think a deal with Yancoal would take a long time to finalise, and Anglo may want a speedier result as part of its defensive play against BHP.

For 2023, Anglo American’s steelmaking coal operations generated 15 million tonnes of coal, equating to $1.3bn of earnings before interest, tax, depreciation and amortisation.

Final bids are due next week.