Asset Screening and Selection Case Study

Recommendation
Based on the clients requirements,  Commodity Insights developed a multi-dimensional screening methodology that including coal quality, reserve levels, typical production rate, cost of production and mine life (based on approvals).

Methodology
An initial screening process was applied to all operating mines in the jurisdiction, which applied criteria including coal quality, reserve levels, typical production rate, cost of production and mine life (based on a approvals). This narrowed the asset group to less than 40.

The remaining assets were then assessed under a number of potential strategy options developed by Commodity Insights (including low-cost portfolio and high-quality assets) which ranked the assets on a number of criteria that were weighted based on the particular strategy option.

A further analysis was conducted based on more qualitative aspects such as possible availability of assets, ownership structure and alternative options (other than outright M&A).

Outcome
The report clearly identified 7 metallurgical coal assets in the jurisdiction that we believed were worthy of consideration under various strategy options the client could select.

Each asset was rigorously profiled, covering all elements of the screening process as well Commodity Insights’ particular views on the assets and their ‘fit’ with the clients’ portfolio, including complementary infrastructure access out to 2035.
The report was presented to senior level management (and shortly to board) and will be incorporated into the internal business development process of the client.

Our client expressed confidence in the process Commodity Insights undertook and also the recommendations made, which will be discussed at board level.