Glencore is in the process of acquiring 77% of Teck Resources’ coal business in a deal that values the enterprise at $9 billion, or more than 4 times next year’s estimated EBITDA, according to LSEG data. In Australia, which accounts for roughly half of all coking coal exports, there is more activity. A BHP-Mitsubishi Corp joint venture, for example, just sold two mines for about 3 times EBITDA, or $3.2 billion, to Whitehaven Coal, which may flog a minority stake to a steelmaker.
Coking coal has what for now is a unique pitch. It provides the heat and carbon necessary for blast furnaces to turn iron ore into molten iron, used to produce about 70% of the world’s 1.8 billion tons of steel each year. The rest comes from scrap metal refashioned in electric-arc furnaces, like ones at the heart of Nippon Steel’s fraught plan to buy United States Steel. This lower-energy process, whose furnaces use less if any coal, is projected to…
