War Chest

Could it be for this?

Pembroke Resources’ Olive Downs selldown looks likely to net more than $1bn for the private equity firm-backed mining business, according to sources, and two Indonesian-backed bidders are battling for the asset.

Olive Downs is up for sale through investment bank Jefferies Australia. Pembroke, a business backed by private equity firm Denham Capital, is offloading a 70 per cent stake.

DataRoom understands that the sale process is now in the second round and Mach Energy, owned by Indonesian conglomerate The Salim Group, and Stanmore Coal, 59 per cent owned by Golden Energy and Resources which in turn is owned by Indonesian conglomerate Sinar Mas, are the final two contenders.

Stanmore also counts Matt Lattimore’s M Resources as a 4.8 per cent holder.

The asking price is believed to be north of $1bn for the stake in Olive Downs, a mine operated by the CIMIC-controlled contractor Thiess.

Thiess also operates the Mount Pleasant thermal coal project in NSW for Mach Energy, which it purchased from Rio Tinto in 2015.

Both have a close relationship with Whitehaven Coal, the group that last year purchased the Blackwater and Daunia metallurgical coal mines from BHP in a deal worth as much as $6.4bn.

Some believe that Whitehaven would have also been an eager buyer of Olive Downs, but is bedding down its latest deal.

Whitehaven also has a sale process running for 20 per cent of Blackwater, with steel producers from Japan and India closing in, including JSW or possibly Mitsui.

There’s speculation in the market that Mach could be shaping as the competition frontrunner for Olive Downs, with former hedge fund manager and Whitehaven Coal director Raymond Zage offering financial fire power to its bid.

Olive Downs was believed to be in the cross hairs of Whitehaven back in 2019.

Back then, a stake of between 25 per cent and 35 per cent was believed to be on the market through investment bank UBS, and also at that time the project with an 80-year mine life was estimated to be north of $1bn.

Olive Downs in Queensland’s Bowen Basin is a world class, large-scale producer of metallurgical coal that started production last year to sell to key markets including Japan, South Korea, China and India.

The first stage of the project needed $450m of investment and was to produce 4.5 million tonnes per annum of steelmaking coal, which will be exported through the Dalrymple Bay Coal Terminal.

It has 843m tonnes of open cut resources and 2 billion tonnes of underground resources and first shipments of the high-quality steel making coal were scheduled to be exported early this year.