Coal minerPeabody Energy Corp. (BTU) has signed an acquisition deal with Thiess Investments Pty Ltd to buy the remaining 5% joint venture interest in an Australian coal mine, the Burton Mine, for AU$35 million. Peabody had acquired 95% of Burton in April 2004. The acquisition of the Burton Mine will bring Peabody’s ownership of the hard coking coal operation in Queensland, Australia to 100%.
Located in the Bowen Basin, about 93 miles southwest of Mackay in Queensland, the Burton Mine is operated under contract by Thiess. The Burton Mine shipped 2.6 million tons of coal in 2010 via the Dalrymple Bay coal terminal and is undergoing an extension that will allow Burton volumes to increase by 1 million to 2 million tons annually in 2012, with operations continuing through 2016.
Peabody estimates the acquisition to add another 165,000 to 275,000 tons of annual volumes to its metallurgical coal portfolio. The deal is expected to close in the third quarter of 2011.
Peabody said the Burton Mine project is part of a large pipeline of metallurgical and thermal expansion projects under way at the company’s operations in Queensland and New South Wales. The company said it is targeting volumes of 35 million to 40 million tons from its Australian platform by 2014 to 2015, up from 27 million tons produced in 2010.
St. Louis, Missouri based Peabody Energy is the world’s largest private sector coal mining company and a global leader in clean coal solutions. The company owns majority interests in 28 mines in the U.S. and Australia. With 2010 sales of 246 million tons and nearly $7 billion in revenues, Peabody fuels 10% of U.S. power and 2% of worldwide electricity.
Peabody Energy currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-term Neutral rating on the stock. The company primarily competes with the likes of Arch Coal Inc. (ACI) and CONSOL Energy Inc. (CNX), which also have a short term Zacks #3 Rank.
