Giants eye Peabody coal mine

Among the other suitors known to have taken a look at an information memorandum were New Hope and Whitehaven Coal.

Mining giants BHP and Anglo American are being tipped as the most logical buyers for Peabody Energy’s North Goonyella underground coal mine in Queensland.

Investment bank Credit Suisse was hired to sell North Goonyella before the onset of COVID-19 this year and, while the asset is problematic, the coal it produces is considered high-quality.

It is thought the asset requires heavy investment after it was subject to a fire, and only large mining groups would be in a position to put forward the capital needed.

BHP, through its Queensland Coal venture with Mitsubishi Alliance, and Anglo American own nearby assets in the Bowen Basin in central Queensland and North Goonyella would be an acquisition highly strategic for both, according to analysts.

The sales process for the mine had paused due to COVID-19, but was understood to have been relaunched.

Among the other suitors known to have taken a look at an information memorandum were New Hope and Whitehaven Coal.

The North Goonyella underground mine is 160km west of Mackay in Queensland, in the Bowen Basin at Moranbah. Its coking coal is exported through the Dalrymple Bay Coal Terminal south of Mackay.

Production stopped at the mine in 2018 due to the fire.

The year before, it produced 2.9 million tonnes of coking coal, but Peabody has signalled no meaningful volumes for three or more years, with development coal to be produced in the second half of the year. There have been suggestions it could fetch about $300m, but much depends on how hard it is to extract the coal following the fire.

Peabody had said it was exploring a sale of the asset after receiving expressions of interest.

The company is the owner of the old Australian-based Macarthur Coal portfolio and entered Chapter 11 bankruptcy in 2016.

While demand still exists for coking coal, like other coal producers, Peabody is facing challenges relating to a decline in the use of thermal coal as customers turn to other energy sources.