Wesfarmers Selling Curragh Mine to Coronado Coal for A$700 Million

By Mike CherneyFeaturesDow Jones Newswires

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.

Write to Mike Cherney at mike.cherney@wsj.com

(END) Dow Jones Newswires

December 21, 2017 17:04 ET (22:04 GMT)