The mothballed Dartbrook coal mine in NSW has gained 5 takeover proposals this yr. Why are such a lot of suitors shopping to get their arms on a mine that has been sitting idle for 16 years?
When Dartbrook proprietor Australian Pacific Coal (AQC) gained a conditional non-binding takeover proposal within the type of a three way partnership between Tetra Assets and Javelin Non-public Capital Staff previous this week, it marked the 5th such be offering at the mine since early 2022.
AQC up to now gained an be offering from Trepang Restricted in February, which used to be adopted by means of an August be offering from Naveko, which incorporated an entity managed by means of well known former mining government Nathan Tinkler.
The be offering from Trepang, which is AQC’s biggest shareholder, fell via when Trepang cancelled the proposed deal on September 1.
This coincided with a bid from Matt Latimore-backed M Assets, which proposed a 50:50 three way partnership (JV) relating to Dartbrook. AQC hastily entered right into a non-binding settlement with M Assets following the proposal.
Every week later, Tinkler re-emerged as a Dartbrook suitor with a $1-a-share bid for the coal mine, this time represented by means of Pacific Top rate Coal (PPC), somewhat than Nakevo.
After all, Tetra and Javelin’s proposal got here on September 15.
So why all of the fuss over this underground coal mine within the Hunter Valley?
The Dartbrook mine has been in a care-and-maintenance section since 2006 following a sequence of protection considerations and 3 deaths, however its proprietor AQC used to be granted a five-year extension for mining operations in March after years of prison battles.
AQC just lately unveiled a $300 million plan to restart the mine inside 18 months, telling buyers it hopes for first coal in 2023 amid what’s described as a “tough marketplace outlook”.
Coal costs have certainly soared in 2022, with Newcastle coal futures proceeding to industry above $US400 according to tonne (t) and anticipated to upward thrust upper as a Ecu Union (EU) ban on Russian coal imports permeates the marketplace.
The EU ban commenced on August 10, which the Ecu Commissions advised would halt imports of €8 billion ($11.54 billion) of Russian coal.
Fitch Answers just lately adjusted its worth predictions for thermal coal from a median of $US230/t in 2022 to $US320/t.
“Thermal coal costs have hit an all-time prime … costs are up eightfold previously two years and that may trade completely the whole lot,” analyst Tim Buckley instructed the ABC. “Even a mine that’s been in care and upkeep – in different phrases, utterly deserted – for the ultimate 15 years may well be resurrected.
“However on this marketplace … you’re speaking about billions and billions of bucks of coal that would doubtlessly be mined even in a three-year duration.”
AQC has a licence to extract six million tonnes of coal each and every yr on the Dartbrook web site till December 5 2027.
AQC instructed buyers the mine had traditionally produced “top of the range thermal coal” and anticipated vital call for from markets reminiscent of Asia and India “to proceed to 2030”.
“This underpins a resilient, forward-looking thermal coal worth in Australia, additional supported by means of Russian provide substitution and will increase in call for for metal infrastructure,” AQC mentioned in a shareholder presentation.