A consortium led by Singapore’s Golden Energy and Resources (GEAR) has secured $850 million to purchase South32’s Australian coking coal assets. The financing comes from a syndicate comprising five private credit lenders and one global investment bank. These entities will lend $600 million to GEAR M Illawarra Met Coal for the acquisition of South32’s Illawarra metallurgical coal business. This information comes from sources familiar with the transaction.
In February, South32 announced its agreement to sell its Illawarra metallurgical coal business in New South Wales for $1.65 billion. This sale is part of South32’s strategy to exit the coal industry and focus on expanding its presence in copper and zinc. The consortium is primarily owned by Indonesia’s Widjaja family, which holds a 70% stake, while the remaining 30% is owned by M Resources, a privately held Australian coal company.
The funding package includes an additional $150 million in working capital and A$150 million ($100 million) in guaranteed facilities provided by banks and insurers. The facility has a five-year term and carries a coupon rate of 850 basis points above the benchmark U.S. overnight financing rate SOFR. Grant Samuel has been appointed as the mandated advisor for this transaction.
Despite requests for comments, representatives from Grant Samuel and GEAR did not respond outside normal business hours. M Resources also declined to comment.
For GEAR and its consortium partners, the acquisition represents a significant investment in Australia’s mining sector. Illawarra’s metallurgical coal is highly valued for steel production, making it a strategic asset. The consortium’s decision to secure substantial private credit financing demonstrates confidence in the long-term viability and profitability of the metallurgical coal market.
Additionally, the involvement of M Resources, with its deep industry expertise and local presence, strengthens the consortium’s position. M Resources’ knowledge of the Australian coal industry and its operational capabilities will be crucial for the successful management and development of the Illawarra assets.
Looking ahead, the successful completion of this transaction will likely inspire further investments and deals within the mining sector. The strategic rationale and financial structure of the GEAR-led consortium’s acquisition could serve as a model for similar transactions, particularly in industries facing funding constraints.
