EMR Capital seeks buyers for its $US3bn Kestrel stake

Investment banks Bank of America and Macquarie Capital were appointed last year to sell Kestrel.

Private equity firm EMR Capital is understood to have revived the sale process for its stake in the Kestrel coal mine, with parties currently carrying out due diligence on the $US3bn ($4.62bn) Queensland asset.

Investment banks Bank of America and Macquarie Capital were appointed in 2024 to sell Kestrel.

The sale process was initially to begin at the start of the year, but it was delayed after a fall in the coal price.

DataRoom understands that the sale process was recently launched.

Initially, about 15 parties were approached about buying the business, but now the process is open only to a more select group.

It’s expected that among the parties taking a look are Stanmore Coal and Yancoal, which were underbidders on the sale process of Anglo American’s Queensland coal mines in 2024.

It will be interesting to see if Whitehaven Coal will be around the hoop.

Last year, it was planning to sit out the sale process because it needed to concentrate on bedding down its Blackwater and Daunia coal mines, purchased from BHP for $5bn in 2023.

Two groups that would almost certainly not be involved are Peabody Energy and Coronado Global.

Peabody Energy agreed to buy Anglo American’s Queensland coal mines in 2024 for $US3.8bn and is now trying to extract itself from the transaction on the grounds of a material adverse change related to a fire at the Moranbah North Mine in Queensland.

Coronado Global’s auditors said in its full-year accounts that substantial doubt existed regarding its ability to continue as a going concern within one year of its financial statements.

Kestrel’s sale process is bad news for Coronado because it is also trying to find buyers for parts of its assets to remain afloat, including Queensland’s Curragh coal mine that is only profitable when the metallurgical coal price is over $US200 a tonne.

Yancoal is 62 per cent-owned by the Chinese state-owned Yankuang Energy, and while it offers top dollar in auctions the time taken to gain Foreign Investment Review Board approval and sign-off from the Chinese state have been a handbrake on it winning local coal mine auctions the past.

Kestrel is the world’s largest underground coking coal mine, producing about 7.1 million tonnes of coal annually.

It is in Queensland’s Bowen Basin, 50km northeast of Emerald, and was purchased from Rio Tinto by the Owen Hegarty-chaired EMR Capital in 2018 for $US2.25bn.

EMR Capital owns 52 per cent. Adaro Energy owns the remainder and has pre-emptive rights to buy out the asset.

It is understood Adaro Energy would be a seller at the right price.

Coking coal futures are currently at $US192 a tonne, while thermal coal is trading at $US113.20.

Metallurgical coal prices reached a low point of $US169 a tonne in late March but then increased to $US193 in May as disruptions to Australian production and exports curtailed supply.

The Department of Industry, Science and Resources said in its quarterly report that Indian demand should support prices in the second half of 2025 and the price should stay about $US200 a tonne over the outlook period.