Pass the parcel

THE last 12 months have seen major change in the ownership structures of coal mines with international players tapping into a buoyant market and finding it relatively easy to convert operating coal assets into cash.

Staff Reporter

In February major US miner, Consol Energy sold its 50% interest in the New South Wales Glennies Creek mine back to AMCI (American Metals & Coal International) for US$27.5 million and the assumption of $21.3 million debt.

 

Consol’s purchase of half the mine in 2001, (for US$14 million) had followed years of planned expansion into Australia. The company’s recent decision to withdraw from Australia appears to be in line with a strategic realignment within the company to focus on its domestic assets. Consol also sold its Canadian holdings in February last year.

 

Up until September last year Consol was majority owned by German energy giant Rheinbraun (RWE). RWE, based in Essen, Germany, acquired its first Consol shares in 1991, eventually owning 73.6% of the company. Last year RWE began to divest its stake in CONSOL as part of a plan to focus on its energy businesses in Europe. RWE sold the last remaining 16.6 million shares in Consol in a private placement sale this February. The sale of Consol is part of a major restructuring RWE is undertaking to “shed activities that no longer fit the business strategy.” The sale also made a big impact on the German group’s balance sheet.

 

Another German major to shed overseas assets recently is RAG. In November and December last year RAG signed memoranda with Peabody Energy for the sale of its mining activities in Australia, Venezuela and Colorado. This included the Twentymile longwall in Colorado and the North Goonyella longwall in Queensland. The US$441 million sale of the operations was finalised in March.

 

Peabody last had a presence in Australia in 2000. Financial problems with partners at the time lead to the company withdrawing from Australia and selling its suite of coal properties, including Bengalla, Ravensworth East, Warkworth and Moura for $US555 million, to Coal & Allied.

 

RAG continued to shed overseas assets this year, signing a memorandum of understanding in February for the sale of 12 US coal mines operating under the RAG American Coal Holding banner to a US consortium consisting of First Reserve Corporation, The Blackstone Group and AMCI.

 

This deal, worth $US641.4 million, covers the remaining mines in the United States with a total annual production of 65 million tons. Longwall mines included in the sale are Cumberland and Emerald in Pennsylvania.

 

"Subject to the approval of the antitrust commissions and RAG authorities, we are targeting for a transaction to close by the end of the first half of 2004," RAG chief executive Jurgen Stadelhofer said in a statement.

 

RAG is selling its foreign mines to pay down some of its Euro 2.5 billion debt which includes Euro 1.9 billion credit used to buy 46% of German chemicals group Degussa AG from E.On AG.

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