Apollo equity firm has eyes on Wesfarmers' mines

Apollo, the global equity firm, is believed to be eagerly pursuing Wesfarmers two east coast mines that have been placed on the market by the Perth-base...

Dale Benton
|Dec 22|magazine6 min read

Apollo, the global equity firm, is believed to be eagerly pursuing Wesfarmers’ two east coast mines that have been placed on the market by the Perth-based conglomerate, according to The Australian Business Review.

The mines are expected to go for a high of $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. The company never explored the transaction further amid speculation that Anglo’s price expectations had changed following the coal price rally.

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.

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.

 

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