SYDNEY--Glencore PLC (GLEN.LN) has struck a deal with Peabody
Energy Corp. (BTU) to develop an open-cut coal mine in between
existing operations run by the two companies in Australia's New
South Wales state.
The 50-50 joint venture will dig the pit between Glencore's
United Collieries coal mine in the Hunter Valley--5% owned by the
Construction, Forestry, Mining and Energy Union--and Peabody's
Wambo operations nearby, the companies said in separate statements
Tuesday.
The project is expected to start in mid-2017, subject to the
necessary regulatory approvals, they said.
The companies said the alliance would help cut costs for both
producers, at a time when coal miners are battling to stay
profitable in the wake of falling commodity prices. "It will
deliver optimal resource recovery and infrastructure use, and
significantly reduce operating and capital costs," Glencore said in
an emailed statement.
Glencore, which will manage the joint venture, said the project
wouldn't increase its overall shipments from the Hunter Valley, but
rather offset falling output from other mines.
"Output from some of Glencore's existing operations will decline
by 2017, so the joint venture enables us to grow value for
shareholders without growing volume," said Glencore.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
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