The $7.8bn Australian listed coal miner Yancoal is said to be shaping up so far as the group gunning the hardest for BHP’s coal mining operations that are up for sale through investment bank Macquarie Capital.
Yancoal has coal mining operations in Queensland, NSW and Western Australia and is dual listed on the stock exchanges in Australia and Hong Kong.
The low cost coal producer of premium thermal, semisoft coking and high quality pulverised coal injection coal, and it sells to the export market.
And like most coal miners right now, it is cashed up, staging a 353 per cent lift in its net profit for 2022 to $3.6bn.
The company is 62 per cent owned by China’s state owned enterprise, the Yankuang Energy Group, while the China state owned China Cinda Asset Management owns about 13.7 per cent of the group.
Yancoal in 2017 purchased the Coal and Allied coal mining business from Rio Tinto for $US2.69bn.
Sources say that so far, Yancoal appears the most keen out of all the suitors to buy the assets.
Yet the big question is whether Yancoal would gain Foreign Investment Review Board permission to buy the coal mines.
The ex-Abbott and Turnbull government minister – who was instrumental in negotiating Australia’s free trade agreement with China – said Chinese companies now considering local investment were being advised not to bother approaching the FIRB.
Figures compiled by KPMG show a sharp fall in Chinese investment in Australia from a peak of around $15.4bn in 2016 – when Australia was the second-largest destination for investment after the US – to $2.5bn in 2020 and $800m in 2021.
As earlier reported by DataRoom, BHP is understood to have attracted between 15 and 25 parties interested in its two Queensland coal mines, Daunia and Blackwater, believed to be worth a combined $2bn.
Expressions of interest for the sale process were received last month.
It is understood that suitors have been offered an extensive amount of information on the offering early on to assess the assets.
Other contenders lining up include Australian-listed Stanmore Coal, which is majority owned by Indonesia’s Sinar Mas Group, the controlling company of Golden Energy in Singapore.
Indian conglomerate JSW is believed to have been taking a look, while BUMA Australia, part of the Delta Dunia Group, is thought to have shown interest.
Peabody Energy, Coronado Global Resources, Whitehaven Coal and New Hope Coal are all taking a look at the mines that are expected to sell for top dollar.
Coal miners right now are flush with cash on the back of soaring coal prices linked to the Ukraine-Russia conflict that has stemmed the flow of fossil fuels for energy.
Whitehaven Coal in October told the market it could return more than $1bn to shareholders in the year in line with its policy of returning 20-50 per cent of net profit to shareholders, as it booked a $2bn annual net profit.
Blackwater produces thermal coal as well as metallurgical coal, while Daunia produces metallurgical coal.
They are two of nine metallurgical coalmines in Queensland’s Bowen Basin that are part of the joint venture, split 50-50 between BHP and Mitsubishi Development.
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