(Corrects bullet point 2, paragraphs 4, 7 to show decision to
end deal was South32's not ACCC's)
* Peabody coal sale in Australia collapses
* South32 kills $200 mln sale to Peabody
* Peabody says will still run the mine
MELBOURNE, April 18 South32 Ltd on
Tuesday killed a $200 million deal to buy Peabody Energy's
Metropolitan coal mine in Australia after running into
competition concerns about supply of coal to local steel makers.
South32, which had been pursuing its first major acquisition
since being spun off by global miner BHP Billiton
, said it was unwilling to take the steps
required to appease Australian steel makers to get the deal over
"To proceed with the acquisition, in light of the
anticipated concessions, would have compromised the merits of
the transaction and this is not something we are prepared to
do," South32 Chief Executive Graham Kerr said in a statement.
The decision by South 32 to abandon the deal underscores
concerns voiced by steel makers that too much of Australia’s
massive coking coal reserves rest in the hands of a small
handful of big miners, including BHP, Mitsui and Anglo
If the deal went through, South32 would have become the only
large supplier of coking coal to the eastern Illawarra
steelmaking hub, a market position opposed by Australia's
biggest steel company, BlueScope Steel Ltd
Steel producers are facing some of the highest raw materials
costs in years as prices for coking coal as high as $300 a tonne
remain well above last year's levels.
South 32's decision also comes just as Peabody has emerged
Peabody in a statement said it was surprised that South32
and Australia's competition watchdog had reached an impasse over
"On the other hand, we see continuing opportunities given
Metropolitan's quality coking coals and port location, and our
objective will be to operate the mine while maximizing returns
in the international marketplace," Peabody President Glenn
Kellow said in a statement.
Peabody said it would keep the 2 million tonnes a year
coking coal mine and its 16.67 percent stake in the Port Kembla
coal terminal and would resume shipments after completing a move
to a new coal panel in the mine at the end of May.
(Reporting by Sonali Paul and James Regan; Editing by Stephen