US-based coal producer Peabody Energy has announced that it has reached an agreement with the international commodities producer and trader Glencore to establish a joint venture to merge Peabody's Wambo open-cut coal mine and Glencore's United coal mine, both located in New South Wales, Australia.
Under the 50-50 joint venture, Glencore will manage the combined mining operations utilizing Wambo open-cut mine's existing infrastructure and Peabody will continue to operate coal washing and loading facilities. The project is anticipated to commence in 2017, subject to regulatory permission.
Peabody's share of the combined operation's output is expected to remain consistent with Wambo open-cut mine's historical volumes of approximately 3 million mt per year.
Earlier this month, Glencore announced that it will shut down its Australian coal operations for three weeks commencing mid-December, given the current oversupply situation. The company stated that its decision reduces the need to push incremental sales into an already weak pricing environment. The shutdown is expected to result in reduced output of about 5 million mt from the Australian assets.