Glencore Forms Venture With Peabody in Australia to Cut Costs
Nov. 25 (Bloomberg) — Glencore Plc, the world’s biggest exporter of power-station coal, agreed to form a venture with Peabody Energy Corp. to combine two mining operations in Australia’s New South Wales state to cut costs.
The deal will merge Glencore’s United mine and Peabody’s Wambo mine in the Hunter Valley region, the Baar, Switzerland- based company said in a statement today. The coal project is expected to start in mid-2017.
“Output from some of Glencore’s existing operations will decline by 2017, so the JV enables us to grow value for shareholders without growing volume,” the company said.
Glencore, tapping the brakes on what has been a steady period of growth in coal production, said this month it will stop production at its Australian mines for three weeks as prices languish at a five-year low. The slide in prices has forced operators to shut mines as lower-cost producers have raised output, deepening a global glut.
The 50-50 venture will be managed by Glencore, with the company’s share of production at a maximum of 3 million metric tons per year of saleable coal, according to the statement.
To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net Iain Wilson, Keith Gosman
