EMR Capital is understood to have hired Bank of America and Macquarie Capital for a sale of its $US3bn-plus Kestrel coal mine that could come on the market as soon as this year.
The asset is likely to come up for sale after the conclusion of the $US4bn Anglo American sale process for Queensland coal mines, capitalising on its strong sale momentum and offering underbidders the opportunity to secure another top-quality asset in the sector.
Kestrel is the world’s largest underground coking or metallurgical coal mine, producing about 7.1 million tonnes of coal annually which is used to make steel worldwide.
It is located in Queensland’s Bowen Basin, 51km northeast of Emerald, and was purchased from Rio Tinto by the Owen Hegarty-chaired EMR Capital in 2018 for $US2.25bn,
Although EMR Capital owns 52 per cent, PT Adaro Energy owns the remainder and has pre-emptive rights to buy out EMR’s stake should it opt to not divest its interest.
The sale comes after BHP also offloaded its Daunia and Blackwater coal mines to Whitehaven Coal last year in a deal worth $US3.2bn, while South32 last year sold its Illawarra Coal mine to Golden Energy Resources and M Resources for $US1.65bn.
EMR Capital, run by former Rio Tinto executives and former mining investment banking experts, has 10-year funds.
It describes itself as a private equity firm specialising in investments in listed and unlisted resource companies with iron ore, coal, potash, coking coal, copper or gold products and mining at various stages of development.
As well as Kestrel, it owns the Ravenswood gold mine on Australia’s east coast near Townsville, for which it has had buyer interest, and the Martabe gold and silver project in Indonesia.
Elsewhere globally, it has a hard coking coal asset in West Cumbria, UK, the Highfield Resources Potash project in Spain and the Peak Minerals potash project in the United States.
EMR Capital listed 29Metals in 2021 for about $1bn. It includes its Capricorn Copper copper and silver mine and the Golden Grove copper, zinc, lead, silver and gold mine.
No doubt playing a part in the current sale process for Anglo American’s coal mining assets and Kestrel will be the coal price and the Queensland Government’s coal mining royalties, which are the largest in the world.
Bowen Coking Coal has blamed the decline in the coal price for its recent woes.
It pointed out that while the group’s financial performance started to turn around in the second half of the year after its Bluff asset transitioned into care and maintenance, it was offset by steeply falling coal prices.
The hard coking coal premium low volatile price decreased 27 per cent from $US324 a tonne at the end of December to $US234 a tonne at June, severely impacting profit margins.
Thermal coal prices fluctuated less over the same period – at $US87 a tonne in June compared with $US94 a tonne in December.
DataRoom reported on Friday that Bowen Coking Coal is believed to be making efforts to raise $70m, after so far gaining commitments for investors to provide at least $30m in a deal handled by Shaw and Partners.
Its share price is suspended as it crosses investors for the raise to pay back debt and makes efforts to lower its operating costs at its coal mines in Queensland’s Bowen Basin.
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