South32 CEO Graham Kerr
Diversified mining company South32 on Thursday announced the $1.65-billion sale of its Illawarra assets, in Australia, marking the group’s exit from coal and aligning with a strategy that emphasised ventures in copper and zinc.
The ASX-, LSE- and JSE-listed miner sold Illawarra to Golden Energy and Resources (GEAR) and M Resources for cash.
GEAR is an investment vehicle that is focused on resources in Asia Pacific. Its current major investments include a 59% interest in Australian miner Stanmore Resources and a 50% interest in Queensland operator Ravenswood Gold.
M Resources specialises in the trading of various metallurgical coal products for steel manufacturing.
South32 CEO Graham Kerr commented that GEAR and M Resources were established participants in the Australian metallurgical coal industry and that they were well positioned to continue the mine’s contribution to the local steel industry and the Illawarra and Macarthur regions.
The transaction, which comprises an upfront cash consideration of $1.05-billion, a deferred cash consideration of $250-million payable in 2030 and a contingent price-linked cash component of up to $350-million, is expected to be completed in the first half of the 2025 financial year.
Besides Foreign Investment Review Board approval and other customary regulatory approvals, the transaction also required the waiver or nonexcercise of pre-emptive rights held by steelmaker BlueScope.
“This transaction will realise significant value for our shareholders and is consistent with our strategy to reshape our portfolio towards commodities critical in the transition to a low-carbon future,” Kerr said.
"The transaction will also simplify our business and reduce our capital intensity," he added.