Reflecting recent volatility in spot coal prices, Wesfarmers will also receive 25% of Curragh’s export coal revenue generated above a realized metallurgical coal price of US$145 per metric ton (mt), paid quarterly over the next two years.
Curragh also produces 3.5 million metric tons per year (mt/y) of steaming coal, which is sold to the Queensland government’s Stanwell Corp.
Coronado Coal Group is a leading U.S. producer of metallurgical coal with three mining complexes in West Virginia and Virginia currently producing 8.2 million mt/y.
The sale is subject to a number of conditions precedent including obtaining approval from the Foreign Investment Review Board, and work is under way to achieve satisfaction of these conditions in the next six months.
Wesfarmers Managing Director Rob Scott said the agreement to sell Curragh follows the company’s plan to evaluate all strategic options for the Resources business to maximize shareholder value. The strategic review of Wesfarmers’ 40% interest in the Bengalla coal mine is ongoing.
“We believe this agreement with Coronado is in the best interests of our shareholders, while giving the employees and customers of Curragh the opportunity to work with a leading coal producer with ambitions to expand in Australia,” Scott said.
Curragh was acquired by Wesfarmers for approximately $200 million in 2000, when it was producing 4.5 million mt of metallurgical and thermal coal.