As coal mining operations expand across the globe, companies are seeing increased profits and are developing solutions to bring down high costs associated with the mining and extraction of coal.
In Australia, Macarthur Coal has been facing a series of adversities, but through careful mining economics has managed to stay afloat and record a recent profit, Reuters reports.
According to the news source, the company is facing a $5 billion takeover, but is working to propose potential counter offers, after forecasts indicated a subtle increase in annual mining profits despite being hit by unanticipated flooding.
Offers of A$15.50 a share have been made by Peabody Energy and ArcelorMittal, and Macarthur is expected to respond to these offers sometime in early September, the deadline which the company has placed.
“Macarthur notes that it is in continuing discussions with a number of interested parties in relation to possible alternative proposals that may result in a superior offer to shareholders,” the company stated.
In South Africa, Optimum Coal is looking into “huge opportunities” for consolidation, that will further feed the robust outlook for coal mining, according to the company’s CEO.
Reuters reports that Optimum has increased its mining productivity by buying prospecting rights from smaller players, and replacing mines once they die.
“There is a huge opportunity for consolidation. There should be consolidation and there will be consolidation,” chief executive Mike Teke told Reuters. “There are a number of small and big players and there are opportunities that are (sold) off by some of the major miners.”
Consolidation would bring mining costs down and spur productivity, as there would be more uniformity in the quality of extraction from varying forms of coal deposits. The rail system, for instance, has previously been disorganized and has limited exports of coal, but investments made to improve the system are paying off, the media outlet stated.
Despite high-cost hurdles, new coal mining operations are taking place in Brazil as well, with mining major Vale’s new $1.66 billion Moatize coal project shipping its first load, bound for Mozambique, in early August, according to Mining Weekly.
The operation is Vale’s largest coal project in the world, and is estimated to produce 8.5 million tons of metallurgical coal and 2.5 million tons of thermal coal each year.
The investments made by coal mining companies are proving to be worthwhile, as productivity continues to increase internationally.
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