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Anglo offloads Australian coal assets for R3,76bn
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Simon Mundy
Business Day
Tuesday, July 06, 2010
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Anglo American yesterday announced the sale of Australian coal assets worth A$580m (R3,76bn), as part of a continuing drive to shed noncore assets.
The move follows two months of controversy around a proposed new mining tax in Australia but Anglo denied that this had played any part in the decision, pointing out that the proposed sale had been made public in February.
“As we indicated earlier in the year, we are divesting of these undeveloped assets, which are some distance from our mining operations, as part of our optimising of our portfolio,” said spokesman Pranill Ramchander.
The five undeveloped assets, which have a total estimated resource of 847-million tons, include two wholly owned underground coal deposits in New South Wales, and a majority stake in three open-cut coal deposits in Queensland.
The buyer is a consortium comprising Korea Electric Power Corporation; Posco, a Korean steel maker; and Cockatoo Coal, an Australian mining company.
The move is in keeping with Anglo American’s strategy in recent years of divesting from noncore businesses to focus on producing iron ore and copper for the Asian market.
That drive has already seen it sell shareholdings in companies including AngloGold Ashanti, Tongaat Hulett and Hulamin.
The company announced in October that it would dispense with interests including its entire portfolio of zinc assets.
Mr Ramchander said the company’s strategy for coal projects in Australia had in no way been affected by concerns over the country’s proposed new mining tax.
“Our strategy for our metallurgical coal business in Australia is aligned with Anglo American’s overall strategy — to focus on large-scale, long-life assets with clear expansion potential.”
The company would now focus on such assets and new projects including the Grosvenor metallurgical coal project in Queensland.
But analysts said that the proposed levy had harmed Australia’s reputation among major mining companies such as Anglo, which were likely to increase their efforts to find opportunities outside Australia.
On May 5, the Australian government unveiled a plan to introduce a “supertax” of 40% on above-normal profits at mining companies. The resulting controversy helped bring about the resignation last month of prime minister Kevin Rudd.
His successor, Julia Gillard, last week presented a revised bill that would impose a smaller levy on only coal and iron-ore projects — but it is still expected to have a significant effect on the profitability of these operations.
“We’ve seen investment in Australia like no other country over the last 20 years, and the potential impact of the mining tax has made the companies realise that they’re not diversified enough geographically,” said Cadiz analyst Peter Major.
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