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UPDATE 1-Boom-to-bust Australian coal baron acquires Anglo American mine

Published 29/12/2015, 08:09 pm
UPDATE 1-Boom-to-bust Australian coal baron acquires Anglo American mine
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* Australian coal baron Tinkler returns with mine purchase

* Australian Pacific buys Anglo American mine Dartbrook

* Sees market for low-ash coal amid downturn (Adds CEO quotes, details)

By James Regan

SYDNEY, Dec 29 (Reuters) - Former Australian coal baron Nathan Tinkler has surfaced as buyer for one of the first of many businesses Anglo American AAL.L is trying to offload as commodity markets deteriorate.

Anglo American last week agreed to sell its 83.33 percent interest in the Dartbrook coal mine - mothballed since 2006 - to Tinkler-led Australian Pacific Coal Ltd AQC.AX . urn:newsml:reuters.com:*:nL3N14D2RA

Tinkler, who rode the mining boom to become Australia's youngest billionaire before losing it all when coal prices collapsed, was appointed chief executive of Australian Pacific Coal on Nov. 2 and owns 37.36 percent of the company.

The one-time electrician last year attempted a comeback in mining but a deal to buy a mine from Peabody Energy BTU.N fell through when he failed to make a A$70 million closing payment.

As coal markets plummeted, Tinkler was forced to sell assets including a beloved thoroughbred horse farm and a professional soccer club to repay debts.

Tinkler said the low-ash type coal he plans to unearth at a rate of 5 million tonnes a year can fill demand for less-polluting coal that is prized for blending with higher-sulphur grades to reduce greenhouse gases. Coal ash is the waste that is left after coal is burned.

Australian Pacific Coal intends to convert the Dartbrook mine from its existing underground set up to an open cut operation, which Tinkler said will lower production costs.

"Based on our numbers, even in today's market, we believe it is a very good investment," Tinkler told Reuters in a telephone interview.

Under the deal, Australian Pacific Coal will acquire Anglo American's interest for up to A$50 million ($36 million), starting with an up-front cash payment of A$25 million.

Tinkler said he and other major shareholders will support any entitlements issue to obtain the needed funds.

Anglo American, the world's fifth-biggest global miner by market value, announced plans to offload three-fifths of its operations and reduce its workforce to 50,000 from 135,000 now. urn:newsml:reuters.com:*:nL8N13X15H

The overhaul highlights the scale of fallout from the slide in commodities prices, which had been forcing miners across the board to rethink job numbers and capital spending.

Thermal coal prices TRAPI2Yc1 have fallen by 80 percent from 2008 peak levels to below $45 per tonne.

But Tinkler is not alone in making a counter-cyclical bet on coal.

New Hope Coal NHC.AX paid $606 million for a 40 percent stake in a mine near the Dartbrook lode held by Rio Tinto (L:RIO) RIO.AX . urn:newsml:reuters.com:*:nL3N11Z5R6.

And Stanmore Coal SMR.AX recently outlined plans to restart a mine it bought from Vale VALE5.SA and Sumitomo Corp 8053.T for $1. urn:newsml:reuters.com:*:nL3N1460A8

"It (Dartbrook) is very good value, but having said that, we understand there are not a lot of buyers out there for coal either and the investment case at the moment is tough," Tinkler said.

($1 = 1.3787 Australian dollars) (Editing by Tom Hogue)

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