Yancoal Australia’s Kestrel Coal acquisition underscored ongoing interest in Australia’s quality coal assets and, if completed, will potentially trigger more transactions in the sector, according to industry advisors.

The ASX and HKEX-listed coal miner announced on Tuesday it has agreed to acquire an 80% interest in Queensland-based Kestrel Coal Mine from EMR Capital and Adaro for up to USD 2.4bn, including USD 1.85bn in upfront cash. The deal is subject to regulatory approvals, including Australia’s Foreign Investment Review Board (FIRB).

A deal has been reached alongside a rebound in metallurgical coal prices since late 2025, driven by supply constraints and steady demand. Kestrel is primarily a met coal asset. But according to Michael Joyce, partner at Gadens, there has been ongoing interest for investment opportunities in Australia’s quality coal assets – both met coal and thermal coal.

“Interest has always been there. There is now perhaps greater recognition that investment in coal is not as stigmatised as in the recent past,” Joyce said, adding that clients continue to actively pursue coal opportunities in Australia.

Mark McAleer, partner and co-lead of the metals and mining sector at Gilbert +Tobin, said coal assets in Australia are becoming more attractive in the current energy crisis, which is seeing energy prices rise globally. Upcoming deal opportunities would likely come from two sources: exits by large owners who seemingly missed the window to exit from coal assets like Rio Tinto did in around 2018, and transactions involving financially distressed mines.

In the first category, the current market environment may well lead those players to run their rulers over those assets and consider whether the current market environment provides an opportunity to exit, while in the second category sustained high coal prices are likely to attract well-capitalised investors to turnaround situations, McAleer said.

Another M&A lawyer noted the Yancoal/Kestrel deal provides a “much-needed valuation benchmark” for premium met coal assets and confirms strong buyer appetite for long-life Bowen Basin operations. If successful, this deal is likely to trigger more transactions, he added.

Interest despite stigma

The Yancoal/Kestrel deal ranks as the third-largest coal deal in Australia by size since 2017, according to Mergermarket data. International buyers have dominated the market since 2023, with participation rising to 61% in 2024 and further to 77% in 2025.

Source: Mergermarket, data correct as at 17-Apr-26.

Now, buying interest is largely driven by Asia, with Joyce mentioning China, Japan, South Korea, and Indonesia. The third lawyer also pointed to domestic operators such as Whitehaven and Stanmore.

Despite persistent negativity around coal, especially thermal coal, investors recognize that Australian thermal coal is of good quality with low ash and low water content, Joyce said.

“If coal is required for energy, you would choose to burn something cleaner,” he added, noting coal continues to account for a significant share of the energy mix in many Asian economies.

Met coal, or coking coal, remains essential for steelmaking, so while some major Japanese investors have announced they would not invest further in coal, good quality coking coal is a different story, Joyce said, pointing to Nippon Steel’s direct investment in Whitehaven’s Blackwater coal mine to secure supply for its steel making value chain. The deal was completed last year.

However, the third M&A lawyer highlighted a clear valuation divergence emerging between met coal and thermal coal assets. Met coal assets retain robust multiples, supported by constrained supply and resilient Asian steel demand, while thermal coal faces structural headwinds from the energy transition. Australian Treasury modelling suggests coal and gas export values could fall by around 50% by 2035, he noted.

A corporate advisor added that Chinese buyers remain actively interested in Australian coal assets, noting that he himself has taken clients to visit and assess coal mines.

With Yancoal now focused on completing the Kestrel acquisition, advisors are hoping a positive regulatory decision by Australia’s Foreign Investment Review Board (FIRB) will give Chinese inbound investment a much-needed boost.

Available assets

The next major test of coal deal momentum will be the re-marketing of Anglo American’s steelmaking coal assets in Queensland, including a basket of assets of Moranbah North, Grosvenor, Capcoal complex, Aquila and its remaining interest in Jellinbah, according to the third M&A lawyer.

Anglo is re-marketing the Australian steelmaking coal assets after a previously agreed USD 3.775bn deal was terminated by Peabody in August 2025. The two are still going through legal arbitration, as reported.

Local media reports suggested Yancoal, Stanmore Coal, and Indonesia’s BUMA were pursuing Anglo’s steelmaking assets.

Other coal assets on the market include Tahmoor Coal, the New South Wales-based coking coal mine owned by billionaire Sanjeev Gupta, which is in liquidation now. This mine has so far mainly attracted local and privately owned investors, according to the corporate advisor, who has been approached by an interested buyer.

Another on the market is the Vulcan Coal complex near Moranbah in Queensland, owned by Vitrinite, which entered receivership earlier this year. This news service reported last month that the receivers are expected to shortlist potential bidders by 20 April.

[Editor’s note: The second paragraph has been amended post-publication for reasons of accuracy.]