US-based Coronado launches $950m IPO, Australia’s top coal float in 6 years

Photo: Reuters

US private equity firm Energy and Minerals Group (EMG) on Monday kicked off its planned float of Coronado Coal Group in Australia, seeking to raise up to A$1.3 billion ($946.1 million) for 30 percent of the group.

The float will give the company an enterprise value of up to A$4.4 billion ($3.2 billion) making it the biggest coal mining float in Australia since Yancoal Australia listed in 2012 at the peak of the country’s mining boom.

Shares in the Connecticut-based company will be priced at between A$4.00 and A$4.80 per share, and EMG will retain 69 percent of the firm until February 2020, when shares will be released from escrow, the company said in a statement.

Coronado mainly produces metallurgical coal used in steelmaking, with annual output of 8.2 million tonnes from three U.S. mines and 8.5 million tonnes from the Curragh mine in Australia, which it bought from Wesfarmers Ltd in December for A$700 million ($508.74 million).

That makes it one of the biggest metallurgical coal producers outside the big diversified miners, competing with US firm Warrior Met Coal Inc.

It also produces 3.5 million tonnes a year of steaming coal at Curragh which it sells to the Queensland state government’s power producer Stanwell Corp.

“Demand from Asia for met coal, particularly from emerging economies, is expected to be strong and Coronado will be a key supplier to this growth market,” Coronado Chairman Greg Martin said in the statement.

“At the same time our U.S. operations have the flexibility to capture favourable pricing dynamics supplying coal both domestically and via export.”

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