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Aspire looking to buy metallurgical coal assets

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World Coal,

ASX-listed Aspire Mining is actively considering acquiring metallurgical coal assets, according to the company’s latest quarterly report, and has teamed up with Asian funders to access potential opportunities.

“There are major structural shifts occurring the metallurgical coal industry at present with the larger companies that participated in the consolidation of the industry by using cheap access to debt […] now significantly weakened,” the company said. “Even companies with quality assets are weighed down by these financial burdens”.

With most of the major diversified miners are seeking to exit the metallurgical coal industry (with the exception of BHP Billiton) and Aspire’s view that the metallurgical coal price has formed a base, the company believes there to be significant potential opportunities to buy metallurgical coal assets.

There has been a steady rise in metallurgical coal prices in 1Q16 with spot prices at a 12 month high of US$99/t FOB Australia for premium hard coking coal. This was driven primarily by an increase in steel production in China, which also increases in demand and prices for iron ore in early 2016.

Combined with continued rationalisation of Chinese domestic supply, Aspire said that it believed the market found its bottom at the end of 2015.

“The company has been reviewing acquisition opportunities for existing and near production coking coal projects both in Australia and Mongolia,” it said and has “formed a consortium with Asian-based funders to access these opportunities.”

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