Macarthur Plans to Expand Operation

Submitted by Jim Thesiger on 23 December, 2009 - 07:07

Macarthur Coal (MCC), a company that supplies coal in the global market has placed a $1.2 billion bid in an attempt to expand into NSW and widen its coal mix along with port options. The company has agreed to buy Gloucester Coal and other assets that are owned by Hong Kong based Noble Group to establish a coal company that will worth $3.4 billion. Noble managed to secure 87.7 percent stake in Gloucester in May beating Whitehaven Coal by placing a bid of $7 per Gloucester share. Macarthur Coal is expected to obtain four new mines in NSW under four separate deals which will reduce its reliance on Queensland's clogged coal port and rail system and will also lengthen the company’s PCI coal production base to comprise additional coking coal and thermal coal.

Nicole Hollows, the chief executive of Macarthur stated that the company will become bigger and stronger if the deal goes on with six mines in three coal basins. It is to be mentioned that the agreement will allow the company to produce 7.5 million tonnes of coal per year where its current production is 5 million.

Noble is planning to sell majority of its Australian mine interests for a 24 per cent stake in Macarthur which will turn it into the largest shareholder of the company. Currently China based Citic owns 22.4 percent stake in Macarthur. However, its percentage of ownership will dilute if the Noble deal goes through. Two other companies- Posco and ArcelorMittal that has stakes in Macarthur will also have their shares reduced with Posco having its shares diluted to around 6.5 percent and ArcelorMittal 13 percent. Along with Gloucester, Macarthur agreed to buy 30 percent Noble stake in Middlemount joint venture as well that is located in Queensland in exchange of $80.5 million in Macarthur shares and $127 million in cash.