Bluescope is weighing its options, as South32 announces the sale of Illawarra Metallurgical Coal (IMC), signalling the mining company’s pivot to low-carbon projects.
The deal will see IMC – which owns the Appin and Dendrobium mines, as well as a stake in the Port Kembla Coal terminal – sold to a consortium, in a deal which could bag South32 up to USD 1.65 billion.
CEO Graham Kerr says Illawarra coal still has value and “will be required until low-carbon steel becomes economically viable on a commercial scale.”
But he admits South32 doesn’t see a future in coal, for the company or its shareholders.
“[The sale] is consistent with our strategy to reshape our portfolio toward commodities critical in the transition to a low-carbon future.”
On completion of the deal, the new owners will include Australia’s privately-held M Resources, and Singapore-registered, Indonesian-owned GEAR, which will hold 70% of the Illawarra business, according to Reuters.
“GEAR and M Resources are established participants in the Australian metallurgical coal industry…[and] are well positioned to continue Illawarra Metallurgical Coal’s contribution to the local steel industry.”
But Bluescope maintains a long term supply contract with IMC until 2032, which includes the right to pre-emptively acquire the business.
In a statement it said it would “consider its position.”
The sale is due for completion in 2025.
