Luxin operates a 600,000 tonne per year plant in the Shanxi Province. Built in 2005, the facility produces coke and also generates electricity with synthetic gas created through coal gasification.
The deal with Shanxi Jiexiu, which also operates coal mines and a coal trading operation, will be structured as a 30-year contractual joint venture. America West Will acquire a 70% equity interest while the Chinese company will retain 30%.
The deal was made for a total of $US40 million in stock and cash. In addition to the issued stock, America West will contribute $30 million to the joint venture when the deal closes, and Shanxi Jiexiu will contribute the coking assets.
The venture will also have rights to metallurgical coal production from Shanxi Jiexiu's coal mines, ensuring a steady and low-cost materials supply. The company’s deposits in the Shanxi Province total more than 100 million tons.
Once the deal closes, America West will oversee Shanxi Jiexiu, which will manage everyday operations.
America West chief executive Dan Baker said the majority interest acquisition diversified the business while also creating a “critical gateway” to China. Additionally, it boosted the company’s position as it sped up plans for a national exchange listing.
“Because this acquisition is ideally aligned with our company's long-term met coal export strategy, America West looks forward to optimizing our met coal assets while further strengthening 'westward' coal export to Asia through US west coast channels," he said.
The transaction is expected to be completed in the first quarter of 2010.
