Mega-miner, South32, is divesting its Illawarra metallurgical coal mine in New South Wales to a joint venture (JV) between Golden Energy and Resources (GEAR) and M Resources, for a maximum of US$1.65B.
The JV will pay US$1.05B upfront when the deal is completed, and another US$250M in deferred cash in 2030. Additionally, the JV will take over the economic and operational responsibility of Illawarra after the deal is done, as well as all its present and future obligations.
In fiscal 2023, Illawarra played a significant role in South32’s revenue, contributing about 18.2% or US1.64B of the company’s total underlying revenue of US$9.05B. The project produces high-quality metallurgical coal, a key ingredient in the production of steel required until low-carbon steel becomes economically viable on a commercial scale.
South32 CEO Graham Kerr said that the deal will help the company focus in on its portfolio and free up capital to invest in other growth projects in minerals like copper and zinc.
GEAR and M Resources are established participants in the Australian metallurgical coal industry, with a strong commitment to environmental and safety standards who are well positioned to continue Illawarra’s metallurgical coal contribution to the local steel industry and the Illawarra and Macarthur regions.
GEAR is an investment vehicle focused on resources in the Asia Pacific region, with current major investments including a 59% interest in Stanmore Resources Limited and a 50% interest in Ravenswood Gold, both in Australia. Stanmore Resources is a listed metallurgical coal producer with operations in the Bowen Basin in Queensland, and Ravenswood Gold has a significant gold mining operation located in northeast Queensland.
Additionally, M Resources is an investment and marketing company with a global market presence, with offices in Australia, Singapore, Switzerland, UK, US, India, Latin America, and China. They specialize in trading various metallurgical coal products for steel manufacturing and have substantial investments across the mining value chain, including Stanmore Resources, One Rail, and Metarock.
“Our focus remains the safe and reliable operation of Illawarra Metallurgical Coal,” said Graham. “Over the coming months, we will work with the buyer, our workforce, the local community, government, customers, and suppliers to support a successful transition of ownership. The deal will also make our business simpler and less capital-intensive.”
