Peabody Energy has teamed up with ArcelorMittal to offer $5bn for Australia’s Macarthur Coal, the world’s largest producer of pulverised coal, as demand for steel making raw material intensifies.
Despite concerns of environmentalists, the global market for coal has never been better, with prices for the pulverised coal mined by Macarthur trading at a narrowing discount to hard coking coal.
ArcelorMittal is the second largest shareholder with a 16.2% stake in Macarthur, according to its website.
The new bid will need the support of China’s Citic Group, which holds 24%, as the proposal is conditional on receiving regulatory approval and winning acceptances to own more than 50% of the company.
The move by Peabody underscores recent efforts to consolidate ownership of collieries in the Bowen Basin of Queensland, where more than a dozen companies rely on limited rail haulage lines and only a handful of ports to ship coal.
An alliance of BHP Billiton and Mitsubishi Corp are the largest operators in the Bowen Basin, exporting some 58Mt/y of metallurgical coal.
Macarthur is a producer of low volatile pulverised coal for injection into blast furnaces.