And there was Bob Brown, leader of The Greens and his mates telling us they wanted to see the end of the coal mining industry, and then we had a plethora of commentators telling us the carbon tax would see miners head offshore, while jobs and investment would be lost.
And as we reported yesterday, the first, concrete investment decision post the carbon tax announcement, was a $4.7 billion assault on Macarthur Coal by Peabody Energy of the US and Arcelor Mittal.
The bid underlined that old market adage" follow the money".
The bidders do not waste money, and one dopey media writer wondered by Peabody bid so quickly after the carbon tax announcement, implying that it should have waited for the Macarthur price to fall even further.
What that commentator forgot was that a quick price will anchor the cost at around this level for the two bidders: it was a premium of 40% to the market price and the sharp rise yesterday by Macarthur shares tells us the market reckons the bid will get up.
The carbon tax hasn’t whacked Macarthur shares, the longer than expected impact of the bad Queensland flooding late last year and then in January and February has done the damage.
Those factors had combined to drag Macarthur down from $14 a share in January to $11.08 late last week.
The two bidders know (because they are in the same industry and Peabody is a rival exporter in NSW) that the Macarthur price would start rising as production and exports return to normal in the next quarter.
And when that happened, the cost of a successful bid would have risen past $5 billion and to well over $16 a share.
The carbon tax was always a minor influence on Macarthur shares, as were the mumblings of Bob Brown and others.
Peabody is the biggest coal miner in the US (but not the world, there are bigger in India and China).
Arcelor is described as an Indian steelmaker, which it is, but its European, US and Eastern European steel business is far bigger and far more important.
They want Macarthur because its the world’s biggest exporter of pulverised coal used in steel blast furnaces. Macarthur has the contacts, the contracts and technology, plus good quality, low cost mines, regardless of what the carbon tax does.
Peabody Chairman and Chief Executive Officer Greg Boyce said in the takeover statement:
"We believe there is significant value that can be created by managing Macarthur’s portfolio of coal assets using Peabody’s industry-leading operating, development and commercial skills. We look forward to advancing this proposal to complete a transaction for the benefit of Macarthur shareholders."
Aditya Mittal, Chief Financial Officer and Member of the Group Management Board of ArcelorMittal, said, "ArcelorMittal has been a long-term investor in Macarthur, and we look forward to discussing our proposal with the board of Macarthur".
The two bidders control around 16% of Macarthur.
Citic with around 24% and Posco with 8.30% will control the success of the bid, not minority shareholders in Macarthur.
Macarthur shares soared 38% yesterday to $15.30 before settling back to $15.14, up $4.06 and 36c under the offer price.
Driving the shares higher was buying by speculative hedge funds (situation types) with more than 42 million Macarthur shares traded for a total value of more than $700 million.
Other coal shares were up as well: Whitehaven Coal added 15c to $6.24 (up 2.4%), New Hope rose 8c to $5.23 and Gloucester Coal jumped 33c to $8.76.
But BHP Billiton shed 74c, or 1.67%, to $43.56 and Rio Tinto fell $1.48, or 1.78%, to $81.72.
That’s despite both being in the coal game, with BHP the world’s major coking coal player.
They fell because of concerns about the euro and worries about the Chinese economy: the carbon tax was forgotten.
It is a second time around for Peabody.
In May last year it reportedly sounded out Macarthur with a $15-a-share offer, said to have been later increased to $16.
That approach came to nothing, with Macarthur’s biggest shareholder, China’s CITIC holding 24%, indicating it was not interested.
The first version of the Mining Resource Rent tax helped scuttle the first offer.
