South32 has scrapped its $US200 million ($A263 million) purchase of a NSW coking coal mine after baulking at the "significant concessions" needed to gain approval from the competition watchdog.
The Australian Competition and Consumer Commission said the proposed acquisition of the Metropolitan Colliery could substantially lessen competition in coking coal supply to local steelmakers in the Illawarra region.
After two months of deliberations, the diversified miner on Tuesday called off the deal.
"South32 is not prepared to make significant concessions in favour of Australian steelmakers that would likely be required to mitigate the competition concerns," the company said in a statement to the Australian Securities Exchange.
"To do so would be contrary to the global market in which metallurgical coal producers compete and would adversely affect the value proposition of the acquisition."
South32 had agreed in November to buy the NSW colliery from US coal giant Peabody, along with a 16.67 per cent stake in the Port Kembla coal terminal in Wollongong.
"Our approach to acquisitions is always opportunistic and seen through the lens of creating value for our shareholders," chief executive Graham Kerr said.
"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 South32 tumbled to their lowest level in more than three months when the ACCC announced its objections in February, but have since risen by 13 per cent with the BHP Billiton spinoff launching a $US500 million buyback.
Share
