THIRROUL, Australia—One of the world’s largest mining companies plans to sell off an Australia coal mine for a paltry A$1 (about 98 Canadian cents).
Terracom Ltd., a small mining company based in Thirroul, New South Wales announced July 4 that it will purchase the Blair Athol Coal Mine in Queensland, Australia from a joint venture controlled by Rio Tinto Group.
“It has been a difficult investment and operating environment with the global coal industry experiencing terrible times over the past three years,” Cameron McRae, Terracom’s executive chairman, said in a letter to shareholders. “Many well-run ‘icon’ companies are now facing bankruptcy or going through debt restructuring. All are focussing on cost containment and balance sheet management.”
“For TerraCom the good news is that the balance sheet repair is largely behind us and we have exciting growth projects in front of us,” he added.
Despite the troubled climate for the once-prized resource, Terracom said it plans to rehabilitate the site, resuming production and exports at one of Queensland’s oldest mines. Faced with changing global energy appetites and low coal prices, Blair Athol ceased production in 2012.
Terracom will make the purchase through its subsidiary, Orion Mining Pty Ltd. The agreement also includes an A$80 million payment from the Blair Athol Coal Joint Venture to account for rehabilitation costs determined last year by Queensland’s Dept. of Environment Heritage Protection; the funds would be held in an account controlled by the region’s Dept. of Natural Resources and Mines.
The deal remains subject to numerous conditions, including government approval of the $80 million package and approvals from both TerraCom’s board and the boards of each joint venture participant.
A similar deal for the northeastern Australia coal mine announced in 2013 fell through.