EMR hires bankers to sell Australia's Kestrel coking coal mine
By Melanie Burton
MELBOURNE, Oct 24 (Reuters) -Private equity house EMR Capital has hired bankers to sell the Kestrel coking coal mine in Australia, a process that could kick off before the year's end, CEO Jason Chang said on Wednesday.
Chang declined to comment on whether the sale process was for EMR's stake only or for the whole operation.
The mine is worth around $3 billion, according to consultancy AME Group.
EMR and Indonesia's Adaro Energy ADRO.JK bought 80% of the underground metallurgical coal mine in Queensland's Bowen Basin from Rio Tinto RIO.AX for $2.25 billion in 2018.
EMR owns 52% of its venture with Adaro which is called Kestrel Coal Resources, while Adaro holds the rest. Japanese trading house Mitsui 8031.T owns the other 20% of the mine.
EMR recently hired Macquarie and Bank of America to run the sale process, Chang said. Adaro and Mitsui did not immediately respond to Reuters requests for comment.
Supply of coking coal, a key steel-making ingredient, is expected to be constrained by government regulations as well as climate change policies adopted by many banks that restrict them from financing fossil fuel projects.
"We are big believers in steel and a big believer that met coal will still be required for making steel for a few decades to come," Chang told Reuters.
"If you look at the number of large-scale met coal assets that have a history of sustainable production, there really aren't that many so I think it's fair to say that Kestrel is one of the last ones that will be transacted for a period of time," he said.
Around $500 million has been spent on the mine which is ramping up to produce 8 million tonnes of coking coal a year, Chang said, adding that Kestrel Coal Resources' net debt stands at $270 million.
"The region is very rich in high quality, prime low vol coal around Kestrel so there is a lot of upside for Kestrel to potentially collaborate with its neighbours to increase production further," he added.
Anglo American AAL.L is also selling steelmaking coal assets in the same region and has said it expects to receive binding offers by mid-November.
Companies with coal businesses in Australia that are looking to grow by acquisitions include M Resources, Yancoal Australia YAL.AX and Indonesia's Delta Dunia Group DOID.JK which runs the BUMA coal mining services business.
Reporting by Melanie Burton; Editing by Edwina Gibbs
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