Anglo American bought the Shell Coal assets for between $US850-900 million ($A1.5 billion). The purchase, announced on June 1, gives Anglo controlling interests in seven Australian mines and the Venezuelan Paso Diablo operation. Importantly, the deal gives it access to markets in Europe, Asia and the United States as well as adding another 17.3 Mt in coking and steaming coal production to Anglo's current production - coal sales in 1999 totalled 62 Mt. Shell's resource base of over 5 billion tonnes is capable of supporting substantial future expansion expected from the newer assets, particularly Moranbah North in Queensland.
Anglo Coal chairman James Campbell that the acquisition of the Shell assets was a big step in Anglo's strategy of becoming a major coal player in the Asian market, supplying coal from both South Africa and Australia. He said gaining access to hard coking coal in Australia was a key part of the strategy given that South African supplies of hard coking coal were now exhausted.
The key asset is clearly the new Moranbah North coking-coal mine in central Queensland. The mine produced 3.3 Mt in its first full year in 1999 and Anglo expects annual output to surge to 6-8 Mtpa.
The deal excluded Shell Coal's Callide power project in Queensland. It is to be sold by the third quarter of 2000. Analysts said the deal could give Billiton plc the opportunity to buy the Drayton and Dartbrook mines from Anglo. The two mines are contiguous to Billiton's large Bayswater colliery in New South Wales.
Shell Coal employs about 1,600 people, mainly in Australia, but Anglo said no immediate redundancies were expected. The business will continue to be run from Brisbane.
Shell generated earnings before interest, tax, depreciation and amortisation of $US104.2 million in calendar 1999. Its net earnings were $US44.7 million and net assets $US494 million. The agreement is expected to be finalised by end-June.
