Peabody Energy has teamed up with ArcelorMittal to offer $5 billion for Australia's Macarthur

RELATED ARTICLES ArcelorMittal sees higher profits in Q2 after strong start India plans may not materialise for 5 more yrs: ArcelorMittal ArcelorMittal sees India plans stalled for years

Coal, the world's bigger producer of pulverised coal, as demand for steel making raw material intensifies

The offer of A$15.50 a share is at a 40% premium to Monday's close and comes only a day after Australia unveiled a plan to tax carbon emissions from the nation's worst polluters or about 500 companies including coal miners.

Despite black eyes from environmentalists, the global market for coal has never been better, with prices for the unique PCI coal mined by Macarthur trading at a narrowing discount to hard coking coal.

Macarthur, named after famed US General Douglas Macarthur, was the subject of a three-way bidding war in 2010 and agreed to enter talks with Peabody, the highest bidder with a A$16 offer.

However, talks collapsed after Peabody cut its offer when the centre-left Labor government slapped coal and iron ore miners with a mining tax.

Steel giant ArcelorMittal is the second largest shareholder with a 16.2% stake in Macarthur, according to its website.

Citic Resources, Macarthur's biggest shareholder, said it would study the offer.

The proposal was conditional on receiving regulatory nod and getting 50.01% stake.

"The Board makes no recommendation in relation to the Indicative Proposal but will seek to engage with Peabody and ArcelorMittal in relation to the price and terms," Macarthur said in a statement.

Macarthur is the world's largest producer of so-called-low volatile pulverized coal injection-type coal used for steel making.

PCI coal is crushed into a fine powder and injected into blast furnaces as a replacement for coke in the production of pig iron.

Macarthur is being advised by JPMorgan and Corrs Chambers Westgarth.