Tuesday, July 16, 2024

Delta Dunia Group acquires Atlantic Carbon Group

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Gusty da Costa

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Jakarta − PT Delta Dunia Makmur, through American Anthracite SPV I, LLC, a subsidiary of BUMA International, has signed a Stock Purchase Agreement (SPA) for acquisition of Atlantic Carbon Group, Inc (ACG), the second largest Ultra High Grade (UHG) anthracite producer in the United States.

The US$122.4 million deal ensures Delta Dunia’s ownership of four producing UHG anthracite mines in Pennsylvania. Following the acquisition, the Group will become a major producer of UHG anthracite globally. This transaction further diversifies its business geographically and into future commodities, in line with its transformation strategy.

Through this transaction, Delta Dunia assumed control of ACG’s operations. UHG’s anthracite is an essential ingredient for the commercial production of low carbon steel (LC Steel) and can reduce carbon emissions from the production process by up to 74 percent. The Group’s anthracite reserves are sufficient to support mining activities for more than 25 years, and will eventually support production capacity of up to 25 million tons of LC Steel per annum.

“Upon completion of the transaction, we will be achieving a number of our strategic milestones. The Group will become the mine owner for a commodity that is critical to LC Steel’s production. We will expand our geographical footprint into other key mining regions,” Ronald Sutardja, President Director of Delta Dunia Group, said in a statement on June 6, 2024.

“This deal further diversifies our revenue towards ESG’s target of reducing revenue from thermal coal to below 50 percent of our total revenue by 2028,” he added.

Enhanced transaction for the group

Expansion into the US allows Delta Dunia to capitalize on the increasing demand for UHG anthracite, which is used in Electric Arc Furnace (EAF). Over the past decade, anthracite exports from the US have grown at a compound annual growth rate (CAGR) of 10.6 percent from FY2014 to FY2023.

All projected steel production capacity expansions in the US and Europe are for EAFs, and UHG anthracite from the US will be an important source of supply for EAFs globally. In addition, governments in a number of key jurisdictions, particularly the UK and German governments, are providing encouragement for conversion from blast furnace to EAF.

The transaction is supported by the Group’s strong cash position and US$750 million syndicated financing facilities from Bank BNI and Bank Mandiri. ACG’s operations are expected to generate additional revenue of US$120-130 million per annum. This projection is in addition to the Group’s previously released revenue guidance for FY2024 based on existing operations.

Sustainable transformation on track

This transaction advances Delta Dunia’s strategic objective to diversify its portfolio and reduce reliance on thermal coal. With the addition of ACG’s operations, revenue from future-facing commodities will increase from 19 percent in FY2023 to 28 percent in FY2024.

In addition to reducing carbon emissions through the use of UHG anthracite in the EAF, ACG’s operations also improve environmental outcomes with sustainable mining practices, as well as remediating previous environmental impacts. ACG is rehabilitating land that was mined more than a century ago, transforming it into areas suitable for development, recreation and conservation. This includes re-opening old mine tunnels to remove remaining material, implementing erosion and sediment control measures, reshaping the landscape to its natural contours, and replanting grass and trees in the area.

Gusty da Costa

Journalist

 

Editor

 

Interview

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