Coal mergers and acquisitions Australia highest in 2009 by Yanzhou Coal Mining

Coal mergers and acquisitions in Australia reached the highest in at least five years in 2009, headed by Yanzhou Coal Mining Co Ltd.?s A$3.5 billion ($3.3 billion) takeover of Felix Resources Ltd. Global producers are looking to expand in the developing world, UBS said. The pace of coal mining takeovers in Australia, the world?s biggest exporter of the fuel, is set to slow after the ranks of potential targets have been thinned by a surge in acquisitions, UBS AG said.

?The big wave of coal deals we?ve seen is over,? Campbell Stewart, head of metals and mining at UBS?s investment banking unit in Melbourne, said in an interview. ?We expect some slowdown in activity because of lower supply.? Anglo American Plc, whose coking coal mines are in Australia, said last month said it?s looking for an acquisition in Russia, Indonesia, Mozambique or Mongolia to more than double output of the fuel.

?There?s more interest in the emerging coal basins, whether that?s in Africa or whether that?s in Indonesia,? Andrew Phillipps, executive director of UBS?s M&A origination, said in an interview. UBS, which advised on the Yanzhou deal, is the top coal M&A adviser this year in Australia, followed by JPMorgan Chase & Co., according to the data.

There were $3.9 billion of announced and completed coal takeovers last year in Australia, according to the data. That compares with $3.35 billion so far this year and $2.23 billion in 2008.

The demand outlook for steelmaking and power station coal is ?robust? because of the urbanization of China and India, Xstrata Plc said last month.

?Demand has actually been pretty constant,? though targets are becoming harder to identify, Campbell said on Sept. 15. Global companies, Chinese and Indian companies, as well as steel producers and trading houses seeking smaller stakes, also have kept inquiries at a consistent level this year, he said.

Potential targets in Australia include Whitehaven Coal Ltd., Macarthur Coal Ltd. and Aquila Resources Ltd., Southern Cross Equities Ltd. said this month. Macarthur this year rejected takeover offers from Peabody Energy Corp. and New Hope Ltd.

Australia is becoming more difficult and less productive as a place to search for opportunities, new deposits will be harder to find and in locations further away from rail and port infrastructure.