Xstrata pays top dollar for BC met coal field
Xstrata's relentless appetite for coal, particularly the metallurgical variety, was again evident on Thursday.
The diversified mining giant is buying a 236 million tonnes coking coal deposit in British Columbia from Talisman Energy, primarily an oil and gas firm.
Xstrata, currently locked in friendly merger talks with Swiss commodities trader Glencore, is paying $500 million in cash for the Sukunka field.
Last year the company bought assets in the Peace River region in northern British Columbia from First Coal and Lossan.
The Globe & Mail reports Talisman got a good price:
“The proceeds were at the higher end of our expected range of $300-million to $500-million, putting the company well on its way to its target,” Andrew Potter, an analyst at CIBC World Markets Inc. in Calgary, said in a note to clients. “Talisman Energy monetized its coal lease for approximately 4 per cent of its market cap – a meaningful contribution for an asset that nobody had placed value on.”
The massive Peace River coal fields supply China and Asian markets of the steelmaking ingredient.
Metallurgical coal has been trading at around the $220–$235 per tonne level in January this year, down from record levels of $330/tonne last year.