Australian conglomerate Wesfarmers Ltd. (WES.AU) said Friday it would sell its Curragh coal mine to U.S. coal producer Coronado Coal Group for 700 million Australian dollars (US$539 million), after launching a strategic review of its resources business last year.
The deal, which is subject to approval from Australia's Foreign Investment Review Board, will net Wesfarmers a post-tax profit of about A$100 million. Wesfarmers will also get 25% of Curragh's export coal revenue above a certain coal price, paid quarterly over the next two years.
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The transaction follows a number of other coal deals recently in Australia, including Rio Tinto PLC's (RIO) exit from a major operation.
Wesfarmers, which also owns retail and grocery chains, says it continues to explore options for its 40% interest in the Bengalla coal mine.
Curragh, in eastern Queensland state, is one of the world's largest metallurgical coal mines and was acquired by Wesfarmers in 2000 for A$200 million, the company said. Wesfarmers said the investment would have delivered an after-tax internal rate of return of about 49% annually.
"We believe this agreement with Coronado is in the best interests of our shareholders, while giving the employees and customers of Curragh the opportunity to work with a leading coal producer with ambitions to expand in Australia," Wesfarmers Managing Director Rob Scott said.
Coronado is a leading U.S. producer of metallurgical coal with three mining complexes in West Virginia and Virginia.
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(END) Dow Jones Newswires
December 21, 2017 17:04 ET (22:04 GMT)