By Hector Forster

September 21, 2018 - Peabody Energy said Friday it has agreed to acquire the Shoal Creek coking coal mine for $400 million from private mining group Drummond Co.

Peabody said it planned to close the acquisition of the Alabama coking coal mine, with 2.1 million st of sales in 2017, by the end of the year. Peabody has assets in Australia serving the coking coal, PCI and thermal markets, as well as US domestic coal mines. The St Louis-based group will use cash from its balance sheet to purchase the mine, preparation plant and supporting assets, and the transaction excludes legacy liabilities other than reclamation, it said.

"The current mine plan accesses 17 million mt of reserves under a minimal-capital plan," using longwall mining in both the Blue Creek and Mary Lee coal seams, Peabody said in a statement.

"Shoal Creek's mining costs per ton approximate the average cost of Peabody's metallurgical coal platform."

Peabody said Shoal Creek coal "typically prices at or near the high-vol A index."

A buyer commented Shoal Creek was recently sold spot on a fixed-price basis, with the Platts US high-vol A HCC price index prices as a reference.

Shoal Creek is sold into Europe, Japan and other markets as a mid-to-high volatile matter coal with higher CSR and fluidity than typical for the US.