Coal Supply Capacity Chain Due Diligence

The Issue

BMA ran a sale process for both its Blackwater and Daunia mines in Central Queensland. Whitehaven had progressed through Stage 1 of the bidding process and submitted a Stage 2 bid based on information made available by BMA in a Stage 2 dataroom.

Whitehaven sought Synergies’ assistance with undertaking both port and rail due diligence.

The Solution

Synergies assisted with Whitehaven Coal’s:

Stage 2 bid, including:

• providing logistics cost analysis for each mine to the relevant coal terminals
• preparing a product flow model for each mine, incorporating the product flows, enabling Whitehaven to estimate the impact of alternative run-of-mine production levels on required logistics contracts;
• undertaking a review of the proposed rail and port logistics arrangements, including contracts to fully assess the issues and risks associated with the arrangements; and
• preparing a due diligence report on the issues and risks associated with proposed rail and port logistics arrangements, including identification of any ‘fatal flaws’, and critical outstanding information.

Stage 3 bid, including:

• undertaking a review of the rail and port contracts to identify if all information was provided to enable a full assessment of the issues and risks associated with the arrangements and to confirm consistency or otherwise with assumptions adopted in our Stage 2 due diligence report;
• preparing a revised logistics cost assessment for each mine to the relevant coal terminal, based on the contracted arrangements and preparing a final due diligence report on the issues and risks associated with proposed rail and port logistics arrangements.  Issues in these contracting arrangements were identified and solutions resolved to enable the transaction to be financed and proceed.

The Benefits

BHP sold both mines to Whitehaven for more than $4 billion.

Contact

To find out more about this project and how Synergies can assist you, send an email to: contactus@synergies.com.au