South32 scrapped purchase contract to acquire Peabody's coal mine after failing to receive necessary approval from the Australian Competition and Consumer Commission (ACCC) for the transaction within the timeframe needed under the contract terms.
In November 2016, the BHP Billiton spinoff firm South32 had entered into an agreement to buy the Metropolitan Collieries in in New South Wales, Australia from Peabody for $200m.
Peabody president and CEO Glenn Kellow said: "We are surprised that South32 and the ACCC reached an impasse, given both the physical synergies and the global nature of the metallurgical coal markets.
"On the other hand, we see continuing opportunities given Metropolitan's quality coking coals and port location, and our objective will be to operate the mine while maximizing returns in the international marketplace."
According to the chief competition regulator, the proposed transaction meant significant reduction in competition in coking coal supply to steelmakers in Australia.
Adding further, the regulator stated that had the transaction been cleared by it, then South32 would have become the lone supplier of coking coal in the medium term for Illawarra once the Tahmoor mine owned by Glencore closes.
With South32 unable to close the mine acquisition, Peabody stated that it will retain the previously negotiated deposit with the termination having no operational impact.
On the other hand, Metropolitan plans to fully continue shipments after scheduled completion of a longwall move to a new coal panel by May end.
The global coal miner, Peabody said that it will include the Metropolitan Mine in its earnings release for the first quarter 2017. Besides, it will move forward with its financial priorities of debt reduction, investing for high yields and pay back cash to shareholders in the course of time.
Image: Peabody’s Wilpinjong coal mining site in New South Wales, Australia. Photo: courtesy of Peabody Energy, Inc.
