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(Bloomberg) -- GFG Alliance, the acquisitive group led by U.K. businessman Sanjeev Gupta, agreed to purchase an Australian coal mine from Glencore Plc to feed its steel operations in the country. 

London-based GFG signed a binding agreement to buy Glencore’s Tahmoor underground mining operation in New South Wales state, it said in an emailed statement Tuesday, confirming an earlier Bloomberg News report. The deal is a key element in GFG’s plan to optimize and expand production at its Whyalla steel works in South Australia, according to the statement, which didn’t provide financial details.

Tahmoor, located about 75 kilometers (47 miles) southwest of Sydney, could fetch as much as A$500 million ($392 million), people with knowledge of the matter said in July. The purchase is subject to New South Wales government approval and is expected to close in the first quarter, Glencore said in a separate statement Tuesday. 

GFG last year added steel operations to iron ore mines in Australia, giving it the capacity to produce 1.2 million metric tons of steel a year. Gupta, GFG’s executive chairman, said in a September interview that the group has been targeting deals to add coal supply that can feed those assets.

Glencore had announced plans in 2016 to close Tahmoor, before a surge in prices for coking coal convinced the producer to sell the operation. The asset, which produces mainly hard coking coal for steelmaking, has 340 workers and produces around 2 million tons annually, according to GFG’s statement Tuesday. Tahmoor is already an important coking coal supplier to the Whyalla steel works, it said.

Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is the senior independent non-executive director at Glencore.

To contact the reporters on this story: David Stringer in Melbourne at dstringer3@bloomberg.net, Brett Foley in Melbourne at bfoley8@bloomberg.net.

To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, Jason Rogers at jrogers73@bloomberg.net, Jake Lloyd-Smith

©2018 Bloomberg L.P.

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