A $600 million coal mine just sold for under $1

There's more bad news for the coal industry.

Yesterday, Bloomberg reported that the biggest American producer of coking coal, Alpha Natural Resources, could file for bankruptcy as soon as Monday.

Competitor Walter Energy filed for bankruptcy earlier this month, and several others have done the same this year.

Now, two companies are so pressed by ten-year-low coal prices, that they've agreed to sell their jointly-owned Australian coking mine for A$1 ($0.73). Coking coal, also known as metallurgic coal, is used for steel production.

In 2012, the Japan-based Sumitomo bought a 50% stake in the Isaac Plains mine for A$430 million ($314 million), thus valuing it at A$860 ($628 million). On Thursday, Sumitomo and its co-owner - Brazil-based Vale - agreed to sell the company to Stanmore Coal for virtually nothing.

According to a press release from Stanmore on Thursday, Sumitomo and Vale will also pay the buyer for some of the contractual commitments it will now be responsible for. This includes fixed infrastructure changes and working capital requirements.

So why is Stanmore essentially getting paid to take over the mine, its processing facilities, and its rail infrastructure? Well, the company will also assume the A$32 million ($23.5 million) rehabilitation obligation while coking coal prices remain depressed due to oversupply.

The company is optimistic as it takes on this huge risk however, and plans to restart mining at Isaac Plains in the first half of 2016, while cutting production to only 1.1 Mt per year.

Stanmore purchased the adjacent Wotonga deposit in early July, and plans to integrate operations at the sites.

"Isaac Plains provides us with all of the necessary infrastructure and sufficient minable coal to commence mining in 2016, while the neighboring Wotonga deposit is anticipated to provide us with a significant mine life extension at a materially lower cost of production.," Nick Jorss, Stanmore's Managing Director said in the press release.

"We have carefully assessed over 40 growth opportunities in coal over the past two years before selecting Isaac Plains and Wotonga as the right fit for our strategy and risk appetite. We are now working hard towards the transition to mining operations to ensure success in what remains a challenging coal market."