Kepco Buys 100% Of Bylong Coal Mine For A$403 Million From Anglo
State-run Korea Electric Power Corp. (015760.SE) said Monday
that it has reached an agreement to buy the Bylong coal mine from
Anglo American PLC (AAL.LN) for A$403 million ($340 million) as
part of the Australian company's efforts to sell off a total of
five coal assets.
Kepco will wholly own the Bylong mine, which has total indicated
and inferred resources of 420 million metric tons of low-ash
thermal coal, used for power generation, extractable via open-cut
and underground mines, the Korean utility firm said in a
The company said it plans to start producing at Bylong in 2016,
and eventually achieve coal output of 7.5 million tons a year.
Separately, Korea's largest steel producer by sales, Posco
(005490.SE), said it and Australia's Cockatoo Coal Ltd. (COK.AU)
will jointly buy 100% of Anglo American's smaller Sutton Forest
A Kepco official said that the company was among 70 bidders,
including Posco and Cockatoo, for the five assets Anglo American is
putting up for sale.
Kepco said a final contract is likely after Anglo American
receives approval for the sale from both its board and the
Australian government's foreign investment review committee,
expected in the fourth quarter of this year.
"Our coal self-sufficiency ratio will rise to 24% from 12% as a
result of the deal, which also puts us into supplier status," Kepco
State-owned Korean energy companies, including Kepco, invested a
combined $4.5 billion last year in overseas resources companies and
energy development projects, bringing total spending over the past
10 years to $9.48 billion, as part of their efforts to secure
stable supply of energy sources.
Posco said in a statement that it has agreed to pay A$50 million
for a 70% stake in Sutton Forest, while Cockatoo will buy the
remainder. It didn't specify the total value of the deal. Kepco
said in its statement that the deal is worth A$72 million
Sutton Forest is a smaller asset, with an inferred 115 million
tons of coal resources, but is attractive because it could produce
both metallurgical coal, used in steelmaking, and thermal coal.
Both are relatively close to railways leading to export
terminals on the coast--Sutton Forest is near Port Kembla and
Bylong is within reach of the port of Newcastle.
Separately, Cockatoo has won a bid to buy a 51% stake in
Ownaview and two other mines from Anglo for a combined A$105
million, Kepco said. The remaining 49% of the three mines is owned
by Mitsui & Co. (8031.TO).
Kepco said it will allow Cockatoo to run Bylong and also give
the Australian company an option to buy 30% of the mine at an
advantageous price in three years.
In return, Kepco said it will take over the 51% stake in
Ownaview from Cockatoo.
Anglo American is selling the assets because they don't form
part of its growth plans in the short-to-medium term. The company's
existing Australian coal mining operations aren't affected by its
decision to sell exploration projects.
Goldman Sachs JBWere is advising Anglo American on the sales
Kepco is invested in Cockatoo Coal with a 3.3% stake, and its
other Australian investments include a minority interest in the
Moorlaben thermal coal mine operated by China's Yanzhou Coal Mining
-By In-Soo Nam, Dow Jones Newswires; 822-3700-1902;