MELBOURNE, Australia--Glencore PLC (GLEN.LN) has agreed to sell an underground coal mine in eastern Australia to GFG Alliance, an industrial conglomerate owned by Britain's Gupta family that last year picked up steel and iron-ore assets in the country.
Financial terms for the acquisition of the Tahmoor mine weren't disclosed by the companies, which said Tuesday they expected the deal to close this quarter, subject to state government approval.
The mine supplies coking coal used in steel production to blast furnaces internationally and in Australia. It also ships to the Whyalla steel operation in southern Australia that was acquired last year by GFG.
Sanjeev Gupta, chairman of GFG, said the acquisition was part of the company's strategy to create an integrated business in Australia that stretches from raw materials and energy to finished products.
"This, together with our iron-ore mines in South Australia, now makes GFG the only fully integrated Australian steel producer," he said.
GFG in September completed the acquisition of the Australian mining and steelmaking operations of failed company Arrium Ltd., including bulk handling facilities at the Whyalla port in the country's south.
Switzerland-based Glencore, one of the largest coal producers in Australia with 17 mines in operation across the east, said business would continue as usual at the mine until the transaction is completed.
The company had planned to halt mining at Tahmoor beyond 2018, but with a recovery in coking coal prices it reversed course in May and restarted development of the mine--but also said it was seeking a buyer.
Located in the Southern Highlands region southwest of Sydney, the mine produced almost 1.8 million metric tons of steelmaking coal in 2016 and has about 57 million tons of reserves, according to estimates.
Mining at Tahmoor began in 1979 and the operation has changed hands several times over the years. In October 2007, it was bought by Xstrata, which is now part of Glencore.
Late last month, Australian retailing-to-mining company Wesfarmers Ltd. (WES.AU) struck a deal to sell its Curragh coking coal mine in eastern Queensland to U.S.-based Coronado Coal Group for 700 million Australian dollars (US$546.3 million) plus 25% of the operation's exports over the next two years when the price of coal is above a certain level.
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(END) Dow Jones Newswires
January 02, 2018 02:31 ET (07:31 GMT)