LONDON (ShareCast) - (ShareCast News) - South32 has agreed to acquire the Metropolitan Colliery, an underground metallurgical coal operation and associated interest in a nearby port terminal, for US$200m from beleaguered US giant Peabody Energy.
As well as the cash payment, the two companies agreed a mechanism where they will both share commodity price upside in the first year of production, or on a minimum 1.3m tonnes, should metallurgical coal prices exceed an agreed forward curve.

South32, which was spun out of BHP Billiton last year, said the colliery was well-capitalised, added an average 1.9mt per year mtpa) of saleable metallurgical coal production and was a "natural fit" in its portfolio.

The addition of the colliery also "unlocks unique blending and resource synergies", the company said, including the potential development of its directly adjacent CCL724 mining lease, which contains a 71mt coal resource.

South32 chief executive Graham Kerr said, "the acquisition is consistent with our strategy to invest in high quality mining operations where we can create value.

"The mine's recently upgraded infrastructure and close proximity to Illawarra Metallurgical Coal will enable us to further optimise performance and unlock unique blending and resource synergies."

US coal mining giant Peabody filed for bankruptcy protection in April after the coal price slump put pressure on its $10.1bn debts.

Shares in South32 were down 4% to 156.5p by late morning in London on Thursday.

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