Three years ago this coal mine was worth $624 million. Now it sold for $1

Three years ago this coal mine was worth $624 million. Now it sold for $1

The destructive force of a collapse in world coal prices has been underscored by the sale of a mine valued at A$860 million ($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 Brisbane-based company said Thursday in a statement. Sumitomo bought a half stake for A$430 million in 2012.

Bloomberg_Steelmaking-coal-prices-plummeting

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. Alpha Natural Resources Inc., the biggest U.S. producer, plans to file for bankruptcy protection in Virginia as soon as Monday, said three people with direct knowledge of the matter. It was valued at $7.3 billion in 2008.

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 outlook for coal is still very difficult,” Roger Downey, Vale’s executive director for fertilizers and coal, said on Thursday after Stanmore announced the sale. “We see even in Australia mines that are still in the red and at some point that has to change. We have quite adverse and challenging markets.”

 

Source: Bloomberg

Date: August 2015

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