First stab at acquisition by Australia's South32 hits competition hurdle

Reuters

Published Feb 23, 2017 00:48

First stab at acquisition by Australia's South32 hits competition hurdle

SYDNEY (Reuters) - The first attempt at an acquisition by Australia's South32 (AX:S32) following its spinoff from BHP Billiton (AX:BHP) (L:BLT) has raised competition concerns with regulators over control of the domestic coking coal market.

Australia's chief competition regulator on Thursday said it was concerned South32's proposed $200 million (160.69 million pounds) acquisition of Peabody Energy's (PK:BTUUQ) Metropolitan colliery in Australia could curb competition in the supply of coking coal in the domestic market.

The acquisition would also include a 16.67 percent stake in a nearby coal terminal.

South32 would become the only large supplier of coking coal to the eastern Illawarra steelmaking hub, the Australian Competition and Consumer Commission (ACCC) said in a preliminary statement on Thursday.

South32 announced the deal with Peabody on Nov. 3, saying the mine would work well with its existing operations.

In a statement emailed to Reuters, South32 said it would continue to engage with the ACCC and that it expected a final decision from the regulator on April 6.

Australia's biggest steel producer and buyer of South32 coking coal, BlueScope Steel (AX:BSL), did not immediately comment.

South32 is a collection of smaller assets spun off from mining giant BHP in 2015. Until recently it was openly pursuing the remaining 40 percent of a manganese mining and smelting business located in Australia and South Africa it jointly owns with Anglo American (LON:AAL).

South32 Chief Executive Graham Kerr this month said that his company was still interested in Anglo American's stake at the right price, but that the transaction was not seen as a necessity.