For those wondering what the plans of EMR Capital are for its Kestrel coal mine in Queensland, the talk is that the private equity firm may wait a year to 18 months to bring the asset to market.
Various coal mines have recently been sold for big prices, causing deal indigestion for all the obvious buyers. These include Whitehaven Coal, which will pay up to $US4.1bn for BHP’s Daunia and Blackwater mines, and Stanmore Coal backer Golden Energy Resources and Matt Latimore’s M Resources buying South32’s Illawarra Metallurgical Coal for $US1.65bn ($2.5bn).
Still, a sale is expected at some stage, given that EMR Capital, run by Owen Hegarty, is a fund and its job is to buy and sell assets.
Coal prices are strong and Kestrel’s size makes the asset unique, and with recent sellers in the sector receiving top dollar, a divestment in this market makes sense.
But the understanding is that EMR is under no time pressure to sell the mine.
Another option is that EMR Capital places Kestrel into a continuation vehicle, as was the move Taurus Investments and Denham Capital made with their assets. This would involve a new fund managed by EMR, which some new investors and some existing investors could capitalise to buy the asset from the current funds.
Kestrel is the world’s largest underground coking or metallurgical coal mine, producing about 7.1 million tonnes of coal annually which is used to make steel throughout the world.
It is located in Queensland’s Bowen Basin, 51km northeast of Emerald.
By Bridget Carter
