AusBN - South32 (ASX:S32) has scrapped its AUS$263 million purchase of a coking coal mine in New South Wales, citing the ‘significant concessions’ needed to gain approval from the competition watchdog.
Following South32’s decision to buy the colliery in November 2016, the Australian Competition and Consumer Commission (ACCC) responded by stating that the acquisition could significantly lessen competition in coking coal supply to local steelmakers in the Illawarra region.
After around two months of deliberations following the ACCC announcement in February, the Perth-based mining firm called off the deal.
In a company statement to the Australian Securities Exchange, the diversified miner said: “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.”
Chief executive Graham Kerr also added: “Our approach to acquisitions is always opportunistic and seen through the lens of creating value for our shareholders.
“To proceed with the acquisition, in light of the anticipated concessions, would have compromised the merits of the transaction and this is not something we are prepared to do.”