South32 scraps $US200m coal mine buy

South32 has scrapped its $US200 million purchase of a NSW coking coal mine after deciding against making what it called significant concessions to gain approval from the competition watchdog.

The diversified miner agreed in November to buy the Metropolitan Colliery in NSW from US coal giant Peabody, along with a 16.67 per cent stake in the Port Kembla coal terminal in Wollongong.

But the Australian Competition and Consumer Commission said in February that the proposed acquisition could substantially lessen competition in the Illawarra region, and South32 this morning called off the deal.

“South32 has always maintained that metallurgical coal is a globally traded commodity,” South32 said.

“Given this, South32 is not prepared to make significant concessions in favour of Australian steelmakers that would likely be required to mitigate the competition concerns.

“To do so would be contrary to the global market in which metallurgical coal producers compete and would adversely affect the value proposition of the acquisition.”

South32 chief executive Graham Kerr said to have proceeded with the acquisition would have compromised the merits of the transaction, which was not something the company was prepared to do.

South32 shares were 1 per cent lower to $2.80 each at 11:15am.