CVRD leaps into Aussie coal with AMCI buy

IRON ore giant Companhia Vale do Rio Doce (CVRD) has bought privately owned Australian coal producer AMCI for $A835 million.
CVRD leaps into Aussie coal with AMCI buy CVRD leaps into Aussie coal with AMCI buy CVRD leaps into Aussie coal with AMCI buy CVRD leaps into Aussie coal with AMCI buy CVRD leaps into Aussie coal with AMCI buy

Courtesy Walter Mining.

Angie Tomlinson

Monday’s purchase means CVRD now controls AMCI’s 8 million ton production capacity of predominantly coking coal and reserves of 103Mt in New South Wales’ Hunter Valley and Queensland’s Bowen Basin.

Brisbane-headquartered AMCI coal assets include the 61%-owned Integra Coal Joint Venture with opencut and underground mines in the Hunter Valley; 80%-owned Carborough Downs Joint Venture in Central Queensland where an underground mine is ramping up to full capacity in 2009-2010; and the 50%-controlled Isaac Plains Joint Venture in Central Queensland where an opencut mine will reach full capacity by 2009-2010.

AMCI also owns 100% of the Broadlea Joint Venture – an opencut mine in Central Queensland.

CVRD said an “extensive and highly prospective” coal exploration portfolio was also included with the acquisition, which has potential for 3 billion tons of non-audited mineralised material.

AMCI has net debt of $A157 million.

With success built on iron ore, CVRD’s foray into coal means the company can offer steelmakers both products, putting it in a favourable position for long-term supply deals.

“As most of the coal is for coke, this looks like part of its efforts to become a one-stop shop for steelmakers,'' John T Boyd and Associates coal market analyst Bill Wolf told Bloomberg.

CVRD has already shown serious interest in the coal business with minority stakes in Chinese companies – Shandong Yankuang International Coking Co and Henan Longyu Energy Resources – and is currently concluding a feasibility study to develop a large coal deposit in Moatize, Mozambique, and a pre-feasibility study of the Belvedere deposit in the Bowen Basin.

The deal allows AMCI to diversify its product and geographic base and enter the Australian coal industry as a coal producer.

The company said the existing AMCI management would support CVRD’s expansion.

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