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Glencore, Peabody Energy Join Forces, Agree to Merge Hunter Valley Coal Mines

Two of the biggest mining companies in Australia have decided to join forces. Swiss commodities trader Glencore has agreed to merge its United Colliery ...

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|Nov 25|magazine4 min read

Two of the biggest mining companies in Australia have decided to join forces. Swiss commodities trader Glencore has agreed to merge its United Colliery coal mine in Hunter Valley with Peabody Energy’s Wambo mine to form a jointly managed project.

The merger, which is the first of its kind in the region, is intended to produce six million tons a year of coal from 2017, with the two partners entitled to half of the output each. The joint venture excludes Peabody’s underground mine at Wambo.

According to the agreement, Glencore will manage the mining operations while Peabody will continue to operate coal washing and loading facilities.

The joint venture will allow Glencore to recoup tonnage lost from declining volumes produced at its existing mines in the Hunter Valley. For Peabody, the deal will help to improve productivity as well as cutting costs and extending the life of both mines.

"Peabody continues to take positive steps to further reduce costs, improve our competitive position and create value," said Peabody Energy president and chief operating officer Glenn Kellow.

The JV will also help preserve jobs and investments in a region that has suffered from the coal downturn over the past few years, according to The Construction, Forestry, Mining and Energy Union.

"It is very welcome news at a time when our region is suffering from substantial job losses in the coal industry," CFMEU district president Peter Jordan said in a statement.

The JV will see miners employed at Peabody’s existing Wambo open cut mine transfer across to the new operations, which Glencore will manage.