In November, South32 entered a binding agreement to buy the colliery and its associated 16.67% interest in the Port Kembla Coal Terminal, representing its first major acquisition since its inception nearly two years ago.

But in February, the ACCC noted that South32 and Metropolitan were two of the Illawarra region’s largest coking coal producers and the two largest coking coal suppliers to Australian steelmakers.

The deal would have made South32 Illawarra’s only supplier of large volumes of coking coal in the medium-term, following the expected closure of Glencore’s Tahmoor mine, which ACCC chairman Rod Sims said would remove competitive rivalry.

South32 said metallurgical coal was a globally traded commodity and it was not prepared to make significant concessions in favour of steelmakers that would likely be required to mitigate the ACCC’s concerns.

“Our approach to acquisitions is always opportunistic and seen through the lens of creating value for our shareholders,” South32 CEO Graham Kerr said.

“To proceed with the acquisition, in light of the anticipated concessions, would have compromised the merits of the transaction and this is not something we are prepared to do.”

RBC Capital Markets analyst Paul Hissey described the news as unfortunate, given the transaction was viewed as value-accretive for South32.

“The proposed acquisition of Metropolitan was a positive pro-growth catalyst for S32 outside of cost-out measures and capital management,” he said.

“We continue to view S32 positively given strong free cashflow generation, the strength of the balance sheet, and potential for additional capital management (particularly if current coal spot prices persist).”

Last week, South32 agreed to spend up to $150 million on Trilogy Metals’ copper projects in Alaska, and is looking for other exploration deals.

South32 shares closed at A$2.83 on Thursday, close to the 2017 high of $2.98 set earlier this month.