Collapse of coal prices highlighted by $1 sale
LONDON The destructive force of a collapse in world coal prices has been underscored by the sale of a mine valued at $860 million Australian (US$631 million) three years ago for just a dollar.
Brazilian miner Vale SA and Japan’s Sumitomo Corp. sold the Isaac Plains coking-coal mine in Australia to Stanmore Coal Ltd., the company said in a statement. Sumitomo bought a half stake for A$430 million in 2012.
A slump in the price of coking coal, used to make steel, to a decade low is forcing mines to close across the world and bankrupting some producers.
Isaac Plains in Queensland “was one of the most exciting coal projects in Australia,” Investec Plc analysts said in a note to investors on Friday. The site has a resource of 30 million metric tons, according to Stanmore.
The company plans to restart output at Isaac Plains at a reduced production rate. It sees “significant” synergies with its adjacent Wotonga deposit, recently acquired. It’s also secured a US$42million loan to help finance a return to production.