A mineral multinational agreed to sell one of its mining operations.
South 32 recently approved a binding agreement to sell Illawarra Metallurgical Coal for US$1.65 billion (A$2.53B) to part of M Resources and Golden Energy and Resources (GEAR).
The deal involves divesting the Appin and Dendrobium coal mines for US$1.05B (A$1.6B) of upfront cash, US$250 million (A$384.7M) of funds deferred to 2030, and US$350M (A$538.6M) of contingent price-linked money.
If the Foreign Investment Review Board and regulatory bodies approve, the transaction is expected to close during the second half of fiscal 2025. Proceeds will be distributed according to the vendor’s capital management framework and commitment to an investment grade credit rating.
“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 Metallurgical Coal’s contribution to the local steel industry and the Illawarra and Macarthur regions,” South32 CEO Graham Kerr said in a public statement.
“Our focus remains the safe and reliable operation of Illawarra Metallurgical Coal. 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 Mining and Energy Union (MEU) welcomed the acquisition’s positive impact on job security for 1000 direct employees plus a further 1600 labour hire and contracted individuals.
“South32 has driven a toxic and divisive employment model built on outsourcing permanent jobs to labour hire companies and pitting contracting firms against each other to undercut wages. It is good riddance as far as we are concerned,” MEU south west district secretary Andy Davey said.
“We will approach this change of owner as an opportunity for more direct employment for Illawarra coal mineworkers. Along with new federal laws giving more rights to labour hire workers, this is a good opportunity to reset working conditions and improve job security.”
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