JPMorgan in box seat as BHP looks at coal sale

BHP Billiton could be moving closer towards a sale of its $US3 billion ($4.2bn) Mount Arthur Coal business in NSW.

Some have suggested that JPMorgan is close to the action and is likely to be working on any deal that transpires, although it is not yet believed to have been appointed.

But market analysts say JPMorgan is in the box seat, with Australian investment banking head Mike Willoughby thought to be close to mining executives at BHP.

Mount Arthur Coal is the largest individual coal production site in the Hunter Valley, producing thermal coal for energy use in Australia and abroad, and speculation has been mounting about the mining giant’s intention for the operations.

One of the factors weighing against a sale is that BHP has tax credits associated with the project that cannot be transferred from when it was part of the former Billiton business.

However, the thinking now is that the time frame for those tax credits is coming to an end, which could make a sale all the more plausible.

Activist investor Elliott Management had been lobbying for a sale of Mount Arthur, which The Australian reported last year could be on the cards, as it also urged the company to divest its US shale assets, which it has since sold.

No doubt, BHP’s executives will be weighing up the timing, which they may feel is right, with the price of coal once again soaring.

The rebound in the commodity price has prompted some miners to turn their attention to asset sales.

Energy and Minerals Group will push ahead with its float of Coronado Global Resources business, despite raising just $774 million in an offering that had initially hoped for $1.4 billion.

The company had wanted to sell down 30 per cent of the $3.8 billion business at between $4 and $4.80 a share but ended up selling 20 per cent priced at $4 a share ahead of the listing — scheduled for tomorrow — to ensure local institutions took up the stock and that it traded well once listed.

It will mark the largest local metals and mining IPO since 2004.