Global private equity firm Apollo is believed to be eagerly pursuing Wesfarmers’ two east coast mines that have been placed on the market by the Perth-based conglomerate.
The expectation is that the mines, which are being divested through investment bank UBS, could fetch a price as high as $2 billion.
Apollo and its backers were at one stage poised to buy Anglo American’s Moranbah North and Grosvenor coal mines in Queensland that were expected to be sold through Bank of America Merrill Lynch for around $1bn. However, Apollo never proceeded with the transaction, with speculation that Anglo’s price expectations had changed following the coal price rally, prompting the vendor to retain the asset.
The price of coal has surged dramatically since the start of July, with coking coal up more than 100 per cent at $US270 a tonne and thermal coal up at least 50 per cent at $US86.
On the market is Wesfarmers’s Curragh coking coal mine in Queensland’s Bowen Basin and a 40 per cent stake in the Bengalla thermal coal mine in the NSW Hunter Valley.
Coking coal is used to make steel, while thermal coal is used to fuel power stations.
Illustrating the speed of the turnaround, just three months ago Wesfarmers managing director Richard Goyder said he was reviewing Curragh in the wake of an $850m writedown on the mine. At the time he said Bengalla, a low-cost mine, was not subject to the review.
It comes amid speculation that Wesfarmers may also sell its chemicals and fertiliser assets, in what would transform the conglomerate into more of a retailer, with its Coles supermarkets, Kmart, Target and Bunnings hardware.
One theory is that Blackstone may buy part of the chemicals and fertilisers business to add to its Ixom operation, which was formerly Orica Chemicals, before listing the operation next year.
However, sources close to Blackstone said it had no interest in the business.
