Will Wesfarmers be the next one out of coal?

The return on capital of the conglomerate’s resources division is roughly a tenth of the return from Bunnings and bidders are likely to be knocking.

Summary: Rio Tinto sold its 40 per cent interest in the Bengalla mine in NSW to New Hope Corporation. There were another five bidders, who are likely to be interested in another 40 per cent stake in the mine, owned by Wesfarmers. The return on capital at Wesfarmers’ resources division is roughly a tenth of the return at Bunnings and the chief executive is not married to coal.

Key take-out: Investment banks value Wesfarmers’ coal assets at up to $1.3 billion but the value could rise substantially higher – if the company is prepared to sell and can find a buyer.


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