South32 Ltd. is selling its Illawarra Metallurgical Coal to GEAR M Illawarra Met Coal Pty Ltd, which is owned (70%) by Golden Energy and Resources Pte Ltd (GEAR) and (30%) by M Resources Pty Ltd. for a total cash consideration of $1.65 billion. The transaction consists of an upfront cash consideration of $1.05 billion, payable at completion and a deferred cash consideration of $250 million, payable in 2030, along with contingent price-linked cash consideration of up to $350 million.
Illawarra is a longwall mining operation that produces roughly 5 million metric tons per year. The sale also includes South32’s 16.67% shareholding in Port Kembla Coal Terminal, Ltd., near Wollongong.
GEAR M Illawarra will assume economic and operating control of Illawarra Metallurgical Coal on completion of the transaction, including all current and future liabilities.
“This transaction will realize significant value for our shareholders and is consistent with our strategy to reshape our portfolio toward commodities critical in the transition to a low-carbon future,” South32 CEO, Graham Kerr said. “It will streamline our portfolio, strengthen our balance sheet and unlock capital to invest in our high-quality development projects in copper and zinc.
Kerr explained that GEAR and M Resources are established operators in the Australian met coal business, with a strong commitment to environmental and safety standards, who are well positioned to continue Illawarra Metallurgical Coal’s contribution to the local steel industry and the Illawarra and Macarthur regions.
The Transaction is expected to complete in H1 FY25, subject to the satisfaction of certain conditions including Foreign Investment Review Board. GEAR is an investment vehicle that is focused on resources in Asia Pacific. GEAR’s current major investments include a 59% interest in Stanmore Resources Limited, an Australian metallurgical coal producer with operations in the Bowen Basin in Queensland, and a 50% interest in Ravenswood Gold, a significant gold mining operation located in northeast Queensland.
M Resources is an investment and marketing company with a global market presence and offices in Australia, Singapore, Switzerland, UK, US, India, Latin America, and China. M Resources specializes in the trading of various metallurgical coal products for steel manufacturing. M Resources also has substantial investments across the mining value chain, including Stanmore Resources, One Rail, Metarock, and others.
