PT Delta Dunia Makmur Tbk, through American Anthracite SPV I, LLC, a subsidiary under PT Bukit Makmur Internasional (BUMA International), has entered into a Stock Purchase Agreement (SPA) for strategic acquisition of Atlantic Carbon Group, Inc. (ACG), the second largest Ultra High Grade (UHG) anthracite producer in the US. The transaction is expected to complete in June 2024. Further details of the transaction will be announced upon completion of the transaction.
Delta Dunia Group is primarily known for its leading contract mining business which includes BUMA, which is the second largest mining contractor in Indonesia with a 20% plus market share. This business also includes BUMA Australia, which evolved out of the acquisition of Open Cut Mining East in 2021, formerly a business segment of Downer EDI Mining. BUMA Australia recently entered into a contract with Blackwater Operations Pty Ltd, a subsidiary of Whitehaven Coal Mining Ltd, to provide pre-strip mining services at Blackwater mine, a metallurgical coal mine in the Bowen Basin, in central Queensland, Australia.
The US$122.4 million deal secures ownership of four producing UHG anthracite mines in Pennsylvania – Jeansville, Spring Mountain, Stockton and Hazleton Shaft. After the acquisition, the Group will become a key UHG anthracite producer globally. The transaction further diversifies the Group’s business geographically and into future-facing commodities, it says in line with its transformation strategy.
It stated: “The transaction is financially attractive due to its favorable valuation, leverage, and earnings impact, and it broadens the Group’s relationships with key customers and stakeholders. With the transaction, the Group assumes control of ACG’s operations. UHG anthracite is essential for the commercial production of low-carbon steel (LC Steel) and can reduce carbon emissions from the production process by up to 74%3. The Group’s anthracite reserves are sufficient to support mining activities for more than 25 years, and in turn, production capacity of up to 25 million tons of LC Steel annually.”
Ronald Sutardja, President Director of Delta Dunia Group, stated: “This transaction is a significant milestone for the Group. Upon completion, we will achieve a number of our strategic objectives. The Group will become a mine owner for a commodity critical for the production of LC Steel. We will expand our geographic footprint into another key mining region. And, the deal further diversifies our revenue towards our ESG target of lowering our thermal coal revenue to below 50% of our total revenue by 2028.”
The Group’s expansion into the US enables it to capitalise on the increasing demand for UHG anthracite, which is used in electric arc furnaces (EAFs). Over the past decade, anthracite exports from the US have grown at a compound annual growth rate (CAGR) of 10.6% from FY2014 to FY2023. All forecast steelmaking capacity expansions in the US and Europe are for EAFs, and UHG anthracite from the US will be a crucial supply source for EAFs globally.
In addition, the governments in a number of key jurisdictions, specifically the UK and German governments, are incentivising the conversion of Blast Furnaces to EAFs. The transaction is supported by the Group’s strong cash position, and US$750 million syndicated financing facility with PT Bank BNI (Persero) Tbk and PT Bank Mandiri (Persero) Tbk.
The ACG operations are expected to add US$120-130 million of revenue per year. These projections are also incremental to the Group’s revenue guidance for FY2024 which was released previously based on existing operations.
Delta Dunia adds: “The transaction advances the Group’s strategic goal of diversifying its portfolio and reducing its dependence on thermal coal. With the addition of the ACG operations, revenue from future-facing commodities will increase from 19% in FY2023 to 28% in FY2024. In addition to cutting carbon emissions through the use of UHG anthracite in EAFs, ACG operations enhance environmental outcomes with sustainable mining practices that remediate historical environmental damage. ACG rehabilitates land mined over a century ago, transforming it into areas suitable for development, recreation, and conservation. This includes reopening old mining tunnels to remove remaining materials, implementing erosion and sediment control measures, reshaping the landscape to its natural contours, and reforesting areas with grass and trees.”
