Peabody Energy and Glencore are to form a joint venture (JV) company with two of their mines in New South Wales, Australia, in order to cut costs amidst falling coal prices.
Under the JV, the companies will combine Peabody's Wambo open cut mine and Glencore's United mine, which are located in Australia's Hunter Valley.
The 50:50 JV will improve productivity, reduce costs and extend the lives of the mines.
Peabody Energy president and COO Glenn Kellow said: "Peabody continues to take positive steps to further reduce costs, improve our competitive position and create value.
"This combined operation is expected to deliver substantial synergies to both parties while providing on-going local employment opportunities and economic contributions."
Merged mine operations will be managed by Glencore using Wambo open cut mine's existing infrastructure and Peabody's coal washing and loading facilities.
Set to commence in 2017, the project is subject to regulatory permitting and will not affect Peabody's North Wambo Underground operations.
Peabody will have a share of the joint operation's output, which is expected to be consistent with Wambo mine's historical volumes of about three million tonnes a year.
Peabody Energy serves metallurgical and thermal coal customers in more than 25 countries across six continents.
Image: Peabody Energy and Glencore to combine two mines in NSW, Australia. Photo: courtesy of Peabody Energy, Inc.