Wesfarmers sells $860m coal stake

Perth-based conglomerate Wesfarmers has sold its stake in the Bengalla coal mine in NSW, continuing a major reshaping of its portfolio after the sale last year of another coal mine and the planned spin-off of its Coles business.

The Bengalla stake was sold to joint venture partner New Hope Group in a deal worth $860 million.

Wesfarmers said today it had sold its 40 per cent share of the project and expected to report a pre-tax profit of between $670 million and $680 million on the sale.

Following completion of the deal, New Hope will hold an 80 per cent stake in the mine, while Japanese outfit Mistui & Co and Taiwanese company Taipower each has a 10 per cent stake.

Managing director Rob Scott said the agreement finalised the review of Wesfarmers’ resources businesses, which was initiated in 2016.

“We believe this agreement with New Hope is in the best interests of our shareholders and ensures a smooth transition in the ownership structure of the Bengalla joint venture,” he said.

“Bengalla has made strong returns for Wesfarmers' shareholders since our initial interest was acquired in 1991 and it is pleasing the extensive, disciplined and patient review of our coal businesses has resulted in outcomes which reflect the value of these world-class assets.”

The news comes after Wesfarmers sold its Curragh coal mine in December last year for $700 million.

For the 12 months to March 29 this year, Wesfarmers’ share of steaming coal production at Bengalla was 3.6 million tonnes, while Curragh produced similar tonnage of steaming coal, along with 8.2mt of metallurgical coal.

Wesfarmers also recently sold its UK hardware company Homebase and is set to demerge Coles in November, while retaining a 15 per cent stake in the supermarket business.

According to the company’s December half-year report, Coles brought in earnings before interest and taxes of $790 million for the six months to December.

Wesfarmers’ Bunnings operations across Australia and New Zealand registered earnings before interest and taxation of $864 million for the half-year period.

The conglomerate's resources division, which includes both coal operations, reported Ebit of $209 million in the half-year.

Shares in Wesfarmers were up 0.58 per cent at $50.22 each at 12.45pm AEDT.