Calcutta, July 11: ArcelorMittal, the world’s largest steel maker, has teamed up with Peabody Energy of the US to mount a bid for Australian miner Macarthur Coal.

The special purpose vehicle formed by the two has offered Macarthur shareholders a cash price of Aus $15.50 per share valuing the mining firm at Aus $4.7 billion.

ArcelorMittal, owned by Indian billionaire Lakshmi Niwas Mittal, already holds nearly 16 per cent stake in Macarthur.

The non-binding bid will be successful if the duo get a minimum 50 per cent of the target company’s share.

The development comes close on the heels of the world’s second-largest miner Rio Tinto’s acquisition of another Australian coal company, Riversdale Mining. Tata Steel, the biggest shareholder in Riversdale before the Rio offer, bowed out by selling its stake in the company, which owns hard coking coal assets in Mozambique in Africa.

The Mittal-Peabody bid indicates further consolidation in the coal sector as well as the clamour among steel companies to secure raw material.

Macarthur is the world’s largest producer of sea-borne low-volatile pulverised coal-injection (PCI) coal with production and development assets in the Bowen Basin, Australia, including the Coppabella and Moorvale joint venture and the Middlemount Mine.

Its estimated reserves are at 1.64 billion tonnes, with discovered reserves of 175 million tonnes. Macarthur has a current production guidance of 3.8-4 million tonnes for the year ended June 30, 2011.

PCI coal, crushed into fine powder and injected into blast furnaces, is used as a replacement for met coke in the production of pig iron, an intermediate of steel.

If successful, both entities will hold around a 50 per cent stake. The bid represents a 40 per cent premium to Monday’s close and comes a day after Australia unveiled a plan to tax carbon emissions from the nation’s worst polluters of about 500 companies, including coal miners.

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.”

Peabody chairman and CEO Greg Boyce said, “We believe there is a 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.”

Macarthur, named after US General Douglas MacArthur, did not recommend the proposal to its shareholders and said it would seek talks with Peabody and Mittal on price and terms.

The success of the bid will also depend on what China’s Citic, the largest shareholder in Macurther with a 24 per cent stake, will do.

Industry observers see the deal as a substantial bet on the strong and steady demand in Asia, not only from China and India but also other countries where steel growth is forecast to be strong.

Macarthur was the subject of a three-way bidding war in 2010 when it agreed to enter talks with Peabody, the highest bidder with an Aus $16 offer. However, the talks collapsed after Peabody cut its offer when the Labor government slapped coal and iron ore miners with a tax.

The timing of the offer caught some investors by surprise. The deal was unveiled just a day after the Australian government’s new carbon levy, and as the company recovers from the recent flooding of its mines.

Analysts, though, said the tax had long been expected in the market and was unlikely to weigh on the deal at current lofty coal prices — unless the government began to raise the levy.

The deal values Macarthur’s 1.64-billion-tonne reserves at nearly Aus $3 per tonne. Rio Tinto’s purchase of Riversdale valued its coking coal-dominated reserves at Aus $0.49 per tonne, while Macarthur paid Aus $1.68 a tonne when it bought some coal mining assets a year ago, according to a report of Morgan Stanley.

Peabody has engaged UBS and Bank of America Merrill Lynch as its financial advisers and Freehills as its legal adviser. ArcelorMittal has engaged RBC Capital Markets as its financial adviser and Mallesons Stephen Jaques as its legal adviser for the potential transaction.