Wesfarmers sells Curragh coal mine to America’s Coronado
Wesfarmers will offload its Curragh mine to US coal producer Coronado for $700m, after seeking a buyer for a year.
Conglomerate Wesfarmers says it is selling its Curragh coal mine to US coal producer Coronado Coal Group for $700 million, after launching a strategic review of its resources business last year.
The deal, which is subject to approval from the Foreign Investment Review Board, will net Wesfarmers a post-tax profit of about $100 million. Wesfarmers will also get 25 per cent of Curragh’s export coal revenue above a certain coal price, paid quarterly over the next two years.
The transaction follows a number of other coal deals recently in Australia, including Rio Tinto’s exit from a major operation.
Wesfarmers (WES), which also owns retail and grocery chains including Coles, says it continues to explore options for its 40 per cent interest in the Bengalla coal mine.
Curragh, in Queensland, is one of the world’s largest metallurgical coal mines and was acquired by Wesfarmers in 2000 for $200 million, the company said.
Wesfarmers said the investment would have delivered an after-tax internal rate of return of about 49 per cent annually.
“We believe this agreement with Coronado is in the best interests of our shareholders, while giving the employees and customers of Curragh the opportunity to work with a leading coal producer with ambitions to expand in Australia,” Wesfarmers managing director Rob Scott said.
Coronado is a leading US producer of metallurgical coal with three mining complexes in West Virginia and Virginia.
Dow Jones Newswires