Peabody assets on the block in Australia

In response, the company is shedding assets and staff, and, according to the Australian Financial Review’s StreetTalk column, the US-headquartered company has its Australian business in its sights.

The AFR says that Peabody is selling most of its Queensland coal exploration portfolio, while canvassing offers for some of its operating assets.

Peabody has been in talks with South Korean steel producer POSCO about selling a stake in its North Goonyella mine, with agreement on price the sticking point.

Other companies reported to be kicking the tyres are Glencore, Mick Davis’ X2 Resources, New Hope Group and Indian and Chinese groups.

In June, Peabody said it would cut up to 200 jobs at North Goonyella as it cuts production by 1.5mtpa and moves to a single shift.

The company said that, “The modified production plan is designed to lower costs, improve cash flows and increase productivity, while preserving high-quality hard-coking coal reserves for sales when markets improve.”

Production at the mine will fall from an anticipated 3mt in 2015 to 2.3mt.

In 2014, Peabody’s Australian operations achieved total sales of 38.2 million tons primarily to steel producers in Japan, Europe, Taiwan, Korea, India and South America, as well as to electricity generators in Australia and Asia.

Peabody’s NSW assets include the Metropolitan, Wambo and Wilpinjong mines. In Queensland its six mines span the length of the Bowen Basin and comprise the Burton, Coppabella, Middlemount, Millennium, Moorvale and North Goonyella operations.

In the US, Peabody announced earlier this month that it would shed 250 “corporate and regional positions in coming months to create a leaner organization and lower costs. When fully implemented later this year, these reductions are expected to save $40 million to $45 million per year.”