Peabody Energy, Glencore To Form Joint Venture

(RTTNews) - Coal company Peabody Energy (BTU) Monday announced an agreement to establish a joint venture between Peabody's Wambo Open-Cut Mine and Glencore Plc's (GLCNF, GLNCY, GLEN.L) United Mine in New South Wales, Australia. The joint venture is expected to deliver significant synergies by improving productivity, lowering costs and extending mine life.

The 50-50 joint venture will combine Wambo's Open-Cut mining operations with United's adjacent reserves in the Hunter Valley. 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 permitting. Peabody's North Wambo Underground operations are not affected.

"Peabody continues to take positive steps to further reduce costs, improve our competitive position and create value," said Peabody Energy President and Chief Operating Officer Glenn Kellow. "This combined operation is expected to deliver substantial synergies to both parties while providing ongoing local employment opportunities and economic contributions."

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 tons per year.