Mining M&A stokes coal race against cleaner power – by Antony Currie (Reuters – June 20, 2024)

MELBOURNE, June 20 (Reuters Breakingviews) – Coal is doomed, or so the energy thesis goes. Many banks, insurers and investors have backpedalled from or abandoned the carbon-belching fossil fuel, prompting companies that excavate it to complain they cannot get mainstream or affordable financing.

One corner of the industry, however, is burning strongly: the coking, or metallurgical, variety used to make steel. For sellers, it’s a diamond underneath the growing pile of mining M&A. Buyers, however, are in a race against low-emissions alternatives to justify their strategies.

The black rock’s lingering sparkle is good news for Anglo American boss Duncan Wanbland. His company’s Australian coal operation probably will be offloaded soon as part of the overhaul designed to help thwart rival BHP’s unsolicited $49 billion takeover attempt last month. Recent transactions suggest there will be no shortage of suitors.

Glencore is in the process of acquiring 77% of Teck Resources’ coal business in a deal that values the enterprise at $9 billion, or more than 4 times next year’s estimated EBITDA, according to LSEG data.

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