Published: October 17, 2022 |

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U.S.-Australian coal mining firms Peabody Energy and Coronado are considering a merger, as coal producers look to scale up to manage risk and reduce reliance on third-party service providers and finance.

The two firms would create a single entity with around 102mn t/yr of thermal coal capacity in the U.S. and 35mn t/yr of coal export capacity from Australia, with around 15mn t/yr of that being Australian metallurgical coal and 20mn t/yr thermal coal.

Coronado told the Australian Stock Exchange that it is in discussions with Peabody regarding a potential combination transaction, but is not in a position to provide details. Both firms operate thermal coal mines in the U.S. and metallurgical-thermal coal mines in Australia, but they are not close neighbors.

Coronado’s 12.5mn t/yr Curragh mine in the Bowen basin region of Queensland, Australia is around 100km or an hour’s drive south of Peabody’s nearest mine at Middlemount, and over 12,200km from Peabody’s New South Wales mining hub at Wambo.

Coronado’s three thermal coal mines in Virginia and West Virginia in the U.S. are around 550km east of Peabody’s nearest mine in Southern Indiana. The majority of Peabody’s U.S. thermal coal is produced in its Powder River basin mines on the other side of the U.S. from Coronado’s operations in Virginia.

Even the closest mines are not proximate enough to share infrastructure with the synergy cost reductions that it brings. But by combining, the firms will increase their capacity to fund capital works at a time when many financial institutions are avoiding the coal industry. It also increases their flexibility to manage volatility in coal prices, with both firms facing major debt problems during the beginning of the Covid-19 pandemic.

This move to scale up coal mining firms is expected to continue as the world economy looks to decarbonize, and coal mining access to third party suppliers and contractors becomes more difficult. It is increasingly difficult for coal mining firms to source insurance, and pressure is mounting on engineering firms and others to not service the coal industry.

Source: Argus Media

About Coronado Global Resources
Coronado Global Resources Inc., together with its subsidiaries, produces, markets, and exports metallurgical coal. It owns a portfolio of operating mines and development projects, including the Curragh mine complex located in the Bowen Basin of Australia; and the Buchanan, Logan, Greenbrier, Pangburn-Shaner-Fallowfield, Russell County, and Amonate mine complexes located in the Central Appalachian region of the United States. Coronado Global Resources Inc. was founded in 2011 and is headquartered in Brisbane, Australia. Coronado Global Resources Inc. operates as a subsidiary of Coronado Group.

To stop by Coronado’s website, CLICK HERE

About Peabody
Peabody is a leading coal producer, providing essential products for the production of affordable, reliable energy, and steel. Its commitment to sustainability underpins everything they do and shapes their strategy for the future.

To stop by Peabody’s website, CLICK HERE

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