Private equity firm EMR Capital has initiated the process to sell the Kestrel coking coal mine in Australia, reported Reuters, citing the company’s CEO Jason Chang.
Investment banking company Macquarie Group and Bank of America have been appointed to oversee the sale process for the mine. The sale could start before the end of the year.
In 2018, EMR and Indonesia’s Adaro Energy acquired an 80% stake in the underground metallurgical coal mine in Queensland’s Bowen Basin from Rio Tinto for $2.25bn.
Currently, EMR holds a 52% share in their joint venture, Kestrel Coal Resources, while Adaro owns the remaining interest.
Japanese trading house Mitsui holds the other 20% stake in the mine.
The sale comes at a time when the supply of coking coal, essential for steel production, faces potential limitations due to governmental regulations and climate change policies.
Chang was quoted by the news agency as saying: “We are big believers in steel and a big believer that met [metallurgical coal] will still be required for making steel for a few decades to come.
“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.”
Chang noted that around $500m has been invested in the mine, which is on track to produce eight million tonnes of coking coal annually.
Kestrel Coal Resources currently has a net debt of $270m (A$406.85m).
“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,” Chang added.
