BHP’s blockbuster sale of its Queensland coal mines, Daunia and Blackwater, is already coaxing out other deals in the sector.
Street Talk understands ASX-listed miner South32 has instructed its adviser, Macquarie Capital, to revive attempts to sell its 50 per cent stake in Queensland’s Eagle Downs coking coal mine. And the bankers have wasted no time, teeing up meetings with prospective suitors this month.
Of note, South32’s joint venture partner, Chinese steel giant Baowu, has separately held informal talks with prospective buyers in recent weeks. Make no mistake, Eagle Downs is expected to fetch a much smaller price tag than Blackwater and Daunia. And it won’t be an easy sell, given it is undeveloped, has a history of holding expensive contracts and has forced South32 to cop impairments over the years. Yet, the project has a 1.14 million-tonne total mineral resource and is adjacent to BHP and Mitsubishi’s Peak Downs in Queensland’s Bowen Basin.
At the time of its arrival, Baowu had already owned Eagle Downs for four years, after a take-private of ASX-listed Aquila Resources. It recently settled expensive port contracts, asCoal Export Terminal , under which it was forced to pay for port and rail capacity it never used. The contracts were signed by Aquila in 2011, with rosy expectations of building a large coal export business from Eagle Downs.
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