South32 calls off Metropolitan Colliery acquisition

Shares in South32 fell on Tuesday after the miner said that it will no longer pursue the acquisition of the Metropolitan Colliery and a 16.67% stake in the Port Kembla coal terminal in Australia from Peabody Energy Corporation.

It will no longer proceed as the Australian Competition and Consumer Commission was concerned that acquisition may substantially lessen competition in the supply of metallurgical coal to Australian steelmakers.

The London-listed company stressed that “metallurgical coal is a globally traded commodity” and that South32 is “not prepared to make significant concessions in favour of Australian steelmakers that would likely be required to mitigate the competition concerns” which would be “contrary to the global market in which metallurgical coal producers compete and would adversely affect the value proposition of the acquisition”.

South32 chief executive Graham Kerr said: "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."

Shares in South32 were down 2.95% to 166.44p at 1224 BST.