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Wesfarmers closer to coal exit with sale

Simone Ziaziaris  |  22 Dec 2017Text size  Decrease  Increase  |  
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SYDNEY - [AAP] Wesfarmers (ASX: WES) is one step closer to exiting coal after inking a deal to sell its Queensland Curragh coal mine to US-based Coronado Coal Group for $700 million.

Wesfarmers, which owns Supermarket giant Coles, expects a post-tax profit of about $100 million from the sale.

It will also receive 25 per cent of Curragh's export coal revenue generated above a realised metallurgical coal price of $US145 ($A203) per tonne, over the next two years.

Newly-appointed managing director Rob Scott said the agreement to sell Curragh follows the group's announcement last year that it was evaluating all options for its resources business in a bid to maximise shareholder value.

The company said a strategic review of its only other coal mine Bengalla, which is located in NSW, is ongoing.

"We believe this agreement with Coronado is in the best interests of our shareholders, while giving the employees and customers of Curragh the opportunity to work with a leading coal producer with ambitions to expand in Australia," Mr Scott said.

Wesfarmers acquired Curragh for about $200 million in 2000, and said it will have delivered a return of almost 50 per cent per annum over the past 17 years.

The mine is one of the largest metallurgical coal mines in the world, with baseline production of 8.5 million tonnes per annum (mtpa) of export coal and 3.5 mtpa of steaming coal which is sold to the Queensland government's Stanwell Corporation.

The deal is subject to a number of conditions and regulatory approval.

 

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