Stanmore snaps up BMC coal mines in $1.8b deal

Stanmore Resources has announced a $1.8 billion deal to acquire mining giant BHP’s 80 per cent interest in BHP Mitsui Coal (BMC). BMC owns the South Walker Creek and Poitrel mines in the Bowen Basin as well as the undeveloped Wards Well coal project. The mines boast a combined metallurgical coal production of around 10Mt per annum and total marketable reserves in excess of 135Mt. Stanmore chief executive officer Marcelo Matos described it as an exciting and transformative acquisition for Stanmore, which owns the Isaac Plains complex near Moranbah and a stake in the newly restarted Millennium/Mavis Downs site (MetRes JV). Related: PIMS taps Komatsu for Millennium fleet The company was fortunate to be able to rely on the full support of controlling shareholders Golden Energy and Resources (GEAR) as well as the Sinar Mas Group to successfully execute the deal, he said. Stanmore Resources chief executive officer Marcelo Matos. "This transaction will see the company become one of the leading metallurgical coal producers globally and provide Stanmore with a portfolio of tier 1 assets, with a significantly increased reserves and resources base and assets with an expected mine life exceeding 25 years production, positioning the company for substantial cashflow generation and future growth opportunities," Mr Matos said. "BHP have managed the BMC business competently and responsibly over the years, and as new custodians we look forward to integrating the BMC business into Stanmore with a continued focus on safety, and responsibly and sustainably producing high quality metallurgical coal products for our global customers.” The new assets would increase Stanmore's metallurgical coal production by 5.6 times. The purchase price for the transaction comprises: $US1.1 billion ($1.48 billion in Australian dollars) payable on completion;$US100 million ($135 million) payable six months post completion; andUp to $US150 million (about $200 million) based on a revenue sharing mechanism if the average sales price achieved is above a certain threshold over a two year period, payable within three months of the end of the testing period (expected in CY2024). Completion of the transaction is expected mid-2022, following the satisfaction of conditions precedent, including regulatory approvals. Stanmore said the BMC assets were in close proximity to Stanmore’s and its MetRes JV’s operating assets. It said there was potential for the combined group to benefit from shared infrastructure, corporate functions and coal blending opportunities. Related: Green light for Isaac Downs coal mine The BMC portfolio includes an 8.4Mtpa coal handling and processing plant (CHPP) at South Walker Creek, the 9Mtpa Red Mountain CHPP (fully owned by BMC) in close proximity to Poitrel, two rail loops and train loading facilities, two Marion 8050 draglines, and a fleet of excavators, dozers and haul trucks. BHP president minerals Australia Edgar Basto. BHP said it would continue to operate BMC assets until completion of the transaction and work closely with Stanmore Resources to ensure a successful transition of ownership. BHP president minerals Australia Edgar Basto said the transaction delivered value for the company and shareholders and provided certainty for BMC’s workforce and the local community. “As the world decarbonises, BHP is sharpening its focus on producing higher quality metallurgical coal sought after by global steelmakers to help increase efficiency and lower emissions," he said. “South Walker Creek and Poitrel are well-run assets that have been an important part of our portfolio for many years and we are grateful for their contribution to BHP. “Under this agreement, BMC will transition to Stanmore Resources, an ASX-listed company that has established relationships with Traditional Owners and strong engagement with their workforce and local communities. “Stanmore Resources share our focus on safety performance and culture and support Australia’s commitments under the Paris Agreement.” BHP said the review process for its New South Wales energy coal assets was progressing, in line with the two-year timeframe announced in August 2020. "BHP remains open to all options and continues consultation with relevant stakeholders," the company stated.

Stanmore snaps up BMC coal mines in $1.8b deal

Industry Queensland

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