TORONTO (miningweekly.com) – The biggest US coal producer, Peabody Energy, has not changed its strategy as far as acquisitions are concerned, despite an abandoned attempt to buy Australian miner Macarthur Coal, CEO Gregory Boyce said on Tuesday.

“I don't think there's anything that's fundamentally changed our views long term,” Boyce said on a conference call with analysts and investors.

“We are still very acquisitive and continue to look for opportunities to add to the portfolio, particularly in the seaborne-traded coal commodities.”

Peabody mines coal in the US and Australia, but is working to boost metallurgical coal output from Australia in particular, to take advantage of Asian demand.

The company offered to buy Macarthur for A$13 a share late in March, and subsequently sweetened its proposal twice, eventually to A$16 a share.

But after the Australian government announced plans to implement a 40% resources profits tax, Peabody lowered its offer back down to A$15 a share and eventually walked away from the deal.

Peabody, which reported second-quarter results on Tuesday, ended the three months with $1,16-billion in cash and cash equivalents.

Boyce said that he would like to see the growing amount of cash on the company's books be used to fund growth, but added that the firm would also consider returning cash to shareholders as a potential option.

Australia has since scrapped plans for the 'super profits' tax, and announced a mineral resources rent tax, which will apply to coal and iron ore operations.

Peabody is still assessing the implications of the new plan, Boyce said.

JUSTIFIABLY BULLISH

As far as demand is concerned, the overall global consumption of coal, particularly for metallurgical coal, remains strong, he said.

Although there has been a moderating in demand growth for metallurgical coal, Boyce said that this has occurred in the lower-quality segments, and that demand for higher-quality steelmaking coal is robust.

A lot of lower-quality coal entered the market in the last several months, which created blending problems for some customers and the industry is now responding by looking for higher quality volumes to offset the lower-quality coal that they committed to, Peabody executives said.

Boyce also cited a number of statistics that indicate that Chinese economic growth remains intact, and that steel and coal demand from the nation continues strong.

The International Energy Agency announced this week that China has become the world's biggest energy consumer, and Chinese imports of coal are expected to hit a new record this year, according to Peabody.

“So, the bottom line? We are justifiably bullish in the near term and feel stronger than ever about the long-term super cycle for coal, driven by Asia Pacific growth,” Boyce said.

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