Anglo perhaps bidding for Macarthur coal

Anglo American are reported to be lining up a counter bid for Macarthur coal, in a land down under. From London. The first suitor that the Macarthur coal board have already rejected comes from US based coal company Peabody Energy, and the well known ArcelorMittal, the global group. 15.50 Aussie Dollars was the first bid price, the Macarthur board said 18 Aussie was a fairer reflection of what they think would be good value for shareholders. Macarthur coal closed 2.32 percent higher this morning in Sydney at 15.68 Aussie.

BTW, the all time high was reached in the middle of 2008, the Macarthur share price nearly got to 20 Aussie. So even that 18 Aussie Dollars is a long way away from the all time high reached over three years ago.

What makes this asset so attractive in the first place? Well, for Peabody the margins are so much better, nearly double. And make no mistake, this is a sizeable transaction for Peabody, perhaps not so much ArcelorMittal, but at these current share price levels Macarthur is around 40 percent of the market capitalisation of Peabody. As per the Macarthur website: "Macarthur Coal Limited is the world's largest producer of (seaborne) low volatile pulverised coal injection (LV PCI) coal product used for steel making. As a supplier to the world's leading steel producers, Macarthur Coal exports its entire product around the globe." LV PCI?

I guess without speculating, let us wait for any official announcement from Anglo American.

I had heard that Anglo CEO, Cynthia Carrol had suggested that Australia would not be a choice destination because of mining taxes, the pending carbon tax. Listen in closely, she said this at the beginning of July: "Governments tempted to move in this direction convince themselves that necessary mining investments in their countries will continue unabated, despite the imposition of such arbitrary changes." Because often governments do not realise that companies have choices and can choose different geographies to mine in.