IF BHP closes high cost mines in Australia and then buys higher cost mines from WLT you need to fire the CEO and BOD . There is no value in WLT. They only have 320 million tons of PCI/Met/Thermal coal. A better deal would be ANR which has 5.2 billion tons of which 4.17 billion tons is either PCI or HCC/MET coal. The CEO of BHP should say not on my watch will we ever buy WLT.
Folks WLT made a bad deal for Western coal and paid to much. The best deal for BHP is to get world class coal reserve of Met coal that ANR has. It can be done for a fair price which is one share of BHP for 1.75 shares of ANR or 126 million shares. That values ANR at $9.14 billion. They gave $7.1 billion for massey and $1.4 billion for foundation coal . CLF offered ANR $128 a share when they had only 550 million tons of Met in 2008.
Now why is it good. One :ANR is number one in Met coal in the US and number three behind BHP and TCK. Two : No 30 percent tax. Three : No carbon tax. Four ANR has cost of less than $74 a ton. Five : ANR has the most export capacity. Six: they have $900 million in cash. Seven : 2/3 of Met coal reserves are low vol Met coal. 1/3 is high vol but can be blended with PCI coal to make a medium grade. Eight: Don`t have to worry about flooding in Queensland. Nine: ANR has stand alone assets in PRB which can be sold off to ACI,BTU,CLD to pay cash back to BHP. Ten: They have NG wells with Rice Energy.
This is just some of the reasons but when you kick the tires you will see there is only one company to buy and it is ANR because it has coal reserves for now and the future.
BHP should make a move on ANR before Glencore makes a move on BHP. As I said no WLT buyout but there will be a bidding war for the coal reserves of ANR. Why? 4.17 billion tons of either Met/PCI coal and 1.03 billion tons of thermal from the PRB ,NAPP and CAPP.
Iron ore is getting hot again and so will Met/PCI coal. Just like the cold in the US we are going to see flooding in Australia before the summer is out.( Our Winter is their Summer) From Dec to March I expect another flood because 4 places around them have been flooded out already. Charts show when snow is heavy in Northern China Australia gets a big flood. The snow is heavy and it has shut down roads in Northern China. So far Queensland and New south Wales have had minor flooding. A big one is coming and when it does Met/PCI coal will spike like it did last year.