Oil giant Shell Group sells coal assets to Anglo

Anglo-Dutch oil giant Royal Dutch Shell Group yesterday announced the long-awaited sale of its Australian- based coal business to Anglo American Plc for up to US$900 million in cash.

The final price will fall between $850 million and $900 million, dependent on balance sheet adjustments on completion of the deal, Shell said in a statement. It said it expected to finalise the agreement by end-June. Shell said in August 1999 that it would invite tenders for its coal business and select a buyer by mid-2000. The price is in line with expectations but well below the more aggressive price tags of $1.0-1.5 billion mooted for the business. Billiton Plc and Rio Tinto Plc were also rumoured to have lodged bids but Anglo was seen by mining analysts as the hungriest for a deal.

“This transaction is in line with Shell’s strategic thrust to focus its portfolio on the oil, gas and power, petrochemicals and renewables businesses,” Shell group managing director Phil Watts said in a statement. Anglo, one of the world’s largest private-sector coal producers – with most of its coal assets in South Africa – said the acquisition would be funded from international debt facilities and would enhance group earnings from 2002.

Anglo said its goal was to expand existing coal supplies into the Mediterranean and Atlantic basins from South Africa and Colombia, and to supply the growing Indo-Pacific coal market from South Africa and Australia. “The acquisition of Shell Coal is a major strategic step in this regard and represents a springboard for Anglo Coal into Australia,” said James Campbell, chairman of Anglo Coal and an executive director of Anglo American. “This is an opportunity for Anglo Coal to invest further in some very long-life mines in a similar manner to what has been achieved in South Africa and is currently being planned for Colombia, and especially in the production of hard coking coal which is no longer available in meaningful quantities in South Africa.” Reuters