Shares of Macarthur Coal Ltd surged Wednesday after ArcelorMittal, the world's largest steelmaker, bought a 14.9 per cent stake in the miner and opened discussions about another transaction.
Macarthur, which supplies more than a third of the world's pulverized coal, said ArcelorMittal had approached it "in respect of a potential transaction" after recently acquiring its stake in two large trades worth 632 million Australian dollars ($606 million; euro387.5 million), or A$20.00 per share.
The miner's shares were up 8.1 per cent at A$19.86 in late afternoon trading, after earlier rising as much as 14.1 per cent.
ArcelorMittal's move is the latest in a steady stream of foreign takeover attempts for Australian miners that have been sparked by surging commodity prices.
Speculation about a takeover for Macarthur has been running hot since the miner said in April it had been approached by a third party about a possible transaction.
Macarthur said Wednesday that this party was not ArcelorMittal and that, while talks have been continuing, there is no certainty that a proposal will be made to the board.
Under Australian takeover law, a bidder for a company has to at least match the price it has paid for any stake in its target, meaning any offer from ArcelorMittal will have to be pitched at A$20 or higher.
Morgan Stanley analyst Craig Campbell said the tight coking coal market and Macarthur's changing profile meant a buyer could see value at more than A$20 a share.
Campbell said the tight coking coal market meant it is likely other potential buyers would take a look at Macarthur. "Anyone that has got an interest in coking coal would have to have a look," he said. "When these opportunities arise you get one shot at it and that is it, the assets don't come around that often."
Macarthur produces the pulverized coal used in steel making. ArcelorMittal is already a large buyer of output from Macarthur's Queensland mines and looks to be acting to lock in supply in a tight market.
Macarthur on Tuesday said its net profit for the 2007-2008 financial year would be in a range of A$67 million to A$75 million ($64 million to $72 million; euro41 million to euro46 million) compared to A$66.5 million in the previous financial year.