Column: China, decarbonization present Australia’s iron ore miners with costly choices
Australia's iron ore sector grapples with challenges in adjusting to decarbonization and peak steel in China.
A consortium led by Golden Energy and Resources Pte Ltd. is sounding out private credit funds and banks to gauge interest in financing its $1.65 billion acquisition of a coal mine in Australia, according to people familiar with the matter.
The acquiring entity, GEAR M Illawarra Met Coal, has mandated Grant Samuel as an adviser in its fundraising talks for the deal to acquire Illawarra Metallurgical Coal from Australia-based South32 Ltd., said the people who asked not to be identified as the talks are private.
Golden Energy, controlled by Indonesia’s Widjaja family, owns a 70% stake in GEAR M Illawarra Met Coal, while M Resources Pty Ltd. holds the remaining 30%.
If the deal proceeds with private funding, it will be the latest example of direct lenders stepping in to fill the spots left vacant by banks that are more tightly scrutinizing environmentally questionable projects.
GEAR M Illawarra Met Coal has yet to formally circulate an official request for proposal to lenders, the people said.
The proposed deal includes an upfront cash payment of $1.05 billion at the time of its completion, deferred cash payment of $250 million payable in 2030, and a contingent price-linked cash component of up to $350 million, according to a filing by South32 last month when the sale was announced.
The sale is expected to close in the first half of 2025, subject to regulatory approvals, it said.
Golden Energy didn’t immediately reply to a request for comment. M Resources declined to comment. Grant Samuel declined to comment.
Golden Energy is no stranger to the private credit market. Stanmore Resources Ltd., an Australian metallurgical company that Golden Energy controls, last year sought a $1.1 billion loan, including a $750 million private credit portion, to back its bid for BHP Group Ltd.’s Daunia coal mine.
Whitehaven Coal Ltd. eventually emerged as the winner for Daunia and another mine. To finance the deal, Whitehaven received a $1.1 billion loan from a group of lenders — including 17 private credit providers but only one bank.
(By Megawati Wijaya and Sharon Klyne)
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