BTU - Australian coal miner Coronado in merger talks with Peabody Energy

Australian coal miner Coronado Global Resources said Tuesday it is in confidential discussions with Peabody Energy ( NYSE: BTU ) about a potential merger deal , Reuters reports.

Coronado, which owns coal mining facilities in Virginia and West Virginia state, said no agreement has been reached with Peabody ( BTU ) and it did not disclose any details on a potential deal.

Shares of both companies have posted strong rallies this year as coal prices have climbed; as of Tuesday's close, Peabody's ( BTU ) market capitalization totaled $3.8B, and Australian-listed Coronado was valued at A$3.26B (US$2.05B)

Coronado held merger talks with U.S.-based peer Arch Resources earlier this year but no agreement was reached.

Some analysts believe Peabody Energy's ( BTU ) free cash flow and earnings will fall off a cliff next year, but meanwhile coal prices in the U.S. are hitting record highs, Michael Wiggins de Oliveira writes in an analysis published recently on Seeking Alpha .

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