WILL sale ever settle?
MANAGEMENT say two more weeks until major mine sale process finalised.
Wednesday 19 October 2016
Management of Batchfire Resources is hopeful of making a statement within a fortnight regarding their attempts to buy the Callide mine near Biloela from Anglo American.
In a brief phone interview with Shift Miner, Batchfire Resources CEO Peter Westerhuis said they expect to have news soon.
“Yes the sale process is progressing well, and in a couple of weeks we should be able to talk more about the sale,” he said.
“But right now, we are not quite ready to say anything.”
Many people will remember Mr Westerhuis from his days as boss at Ensham mine back in 2011. In January his name resurfaced as CEO for the newly created Batchfire Resources who made headlines after entering into a sale and purchase agreement (SPA) with Anglo American to buy the Callide operation.
However while both parties were quick to announce the non-binding SPA, the transition to a fully fledged sale has been far slower than anyone predicted.
“What the future is for the current workforce and the proposed Boundary Hill South expansions are both good questions,” Mr Westerhuis told Shift Miner in January.
“However the deal is not yet finalised, there are still some mechanical things to be worked through, so any comments about the future of the mine are still, unfortunately, speculative.
“So it is not going to be constructive for us to make comments about them until the deal is finalised, hopefully by April.”
Possibly slowing the sale process has been the meteoric coal price rises that will have significantly improved the profitability of all Anglo’ s mines.
In August, Anglo CEO Mark Cutifani said the turnaround in the business gave them an enviable position in sale negotiations.
“We're not going to sell an asset for anything significantly under real value,” he said.
"The good thing from our perspective is we're generating cash at the operating level so that gives us the ability to be tougher on value.”
The Callide mine is an open pit thermal coal mine which produces around seven and a half million tonnes of coal a year. Unlike many other mines, the majority of its coal is sold directly to local power stations on long-term fixed contracts.
Aside from the recent price of coal, the mine has a suite of other problems including a very old mining fleet, and the stalled Boundary Hill South expansion project.
That project has been in development for more than five years but was cancelled before Anglo American announced the possible sale of the mine to Batchfire Resources.