Laborer-Turned-Billionaire Tinkler Plans More Coal M&A

Aston Resources Chairman Nathan Tinkler
Nathan Tinkler, chairman of Aston Resources Ltd. Photographer: Martyn Rushby/Aston Resources Ltd. via Bloomberg

Electrician-turned-miner Nathan Tinkler, Australia’s youngest billionaire who yesterday agreed to sell his coal assets for A$2.6 billion ($2.6 billion) in stock, is looking for his next mining deal overseas.

Tinkler, 36, sold his house in 2006 to help buy the A$30 million Middlemount coal lease in Australia’s Queensland state from Canada’s Sennen Resources Ltd. Now he’s set to become the biggest shareholder in a new company created by Whitehaven Coal Ltd.’s purchase of his Aston Resources Ltd.

“I like risk, I like leverage and that’s something that’s served me well in the past and will serve me well in the future,” Tinkler said in a phone interview yesterday. “I have an aggressive mindset in the way that I do things and the way I deliver opportunities.”

Whitehaven yesterday agreed to buy Tinkler’s Australian mining assets for at least A$2.6 billion in stock, pushing the value of coal deals this year to a record. Sydney-based Whitehaven offered 1.89 of its shares for every one of Aston’s, for a total value of A$2.15 billion. Tinkler is Aston’s largest shareholder with a 32 percent stake.

“He seems to be the kind of person who gets things done,” Peter Chilton, who helps manage about $790 million at Constellation Capital Management LLC in Sydney, said in a phone interview. “He appears to be quite good,” at doing deals.

Whitehaven, which slipped 3.3 percent to A$5.55 at the close in Sydney today, also agreed to buy his closely held exploration company Boardwalk Resources Pty for at least A$477 million in shares. The two deals give Tinkler a 19 percent stake in the new company. Aston dropped 1 percent today.

Coal Deals

Buying Aston gives Whitehaven control of the Maules Creek steelmaking coal project, which will more than double the company’s output by 2016. Rising demand for coal in China and India has pushed coal deals globally to a record $40.3 billion this year, compared with $36.7 billion last year.

The “massive” industry consolidation in mining is set to continue, driven by low valuations, BlackRock Inc., which manages $36 billion in natural resources funds, said in October.

Market volatility has created opportunities for mining companies benefiting from strong commodity prices. The value of miners has fallen by 28 percent this year, according to the Bloomberg World Mining Index, compared with a 9 percent decline in commodity prices as measured by the Thomson Reuters/ Jefferies CRB Index, which tracks prices of 19 commodities from copper to corn.

The collapse in equity markets has created a gap between value and stock prices, Royal Bank of Scotland Group Plc analysts led by Lyndon Fagan said in a Nov. 25 report.

Doubling Returns

Tinkler sold the Middlemount coking coal tenement to Macarthur Coal Ltd. in 2007 for A$265 million in cash and almost 25 million Macarthur shares, worth A$200 million at the time. That made him the second-largest Macarthur holder behind Ken Talbot, who Tinkler said was his role model in business.

Talbot, who died in a plane crash in the Republic of Congo en route to one of his iron ore investments in 2010, headed the closely held Talbot Group that held a number of stakes in resources companies in Australia and overseas.

Five months later, in May 2008, Tinkler sold his Macarthur stake to ArcelorMittal, the world’s largest steelmaker, reaping a profit of about A$445 million. He then bought Maules Creek, a coal asset in New South Wales, from Rio Tinto Group for A$480 million in August 2010.

Overseas Opportunities

Seeking funds to develop the project, Tinkler listed Aston Resources, containing Maules Creek, in August 2010, raising A$400 million in a share sale that valued the company at A$1.2 billion. With a fortune of A$1.13 billion, according to Business Review Weekly magazine, he’s Australia’s youngest billionaire.

Similar to when he received his stake in Macarthur, Tinkler, who has an electrical fitter qualification, won’t take up a board position on the combined Whitehaven-Aston company because of the demands of such a position of a publicly traded company.

“I put good people on the board to represent my interests,” said Tinkler. “My interest in coal is expanding a lot further, a lot more outside of Australia. I’m seeing a lot more opportunities overseas these days than in Australia and I want to be free to pursue those.”

Rival Port

Last month, Tinkler’s Hunter Ports proposed building a A$2.5 billion coal export terminal in Newcastle, the world’s biggest port for thermal coal, to ship coal from Aston and other projects to global markets. The plan competes with one submitted by the current operator Port Waratah Coal Services Ltd. and seeks to double the quantity being shipped annually from the harbor in New South Wales.

Tinkler worked at a number of different coal mines after completing his apprenticeship before setting up his company Custom Mining Solutions that provided electrical services to the mining industry.

“Most of what I learned about coal mining was from working with good people across a combination of coal operations,” he said. “I was fortunate to pick up a few things on the way through.”

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