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Anglo American has agreed to sell its remaining steelmaking coal mines in Australia to Peabody Energy for up to $3.78bn, securing a key milestone in Anglo’s radical restructuring plan.
The transaction is the first of four big business divestments that the company promised in May after it fought off a £39bn hostile takeover attempt from BHP. The company is offloading its trophy De Beers diamond arm, as well as its coal, nickel and platinum units, leaving the business focused on copper, iron ore and fertilisers.
Anglo chief executive Duncan Wanblad said the sale of the steelmaking coal business was “another important step” towards delivering the strategy the company set out, to create a “world class copper, premium iron ore and crop nutrients business”.
Anglo said the $3.78bn sale included $2.73bn in cash — $2.05bn upfront on completion of the transaction and $725mn deferred and payable in instalments over the next four years.
The deal also includes $550mn in potential payments linked to the coal price, and $450mn linked to Peabody’s success in reopening the Grosvenor mine in Queensland, where Anglo-American suspended production following an underground gas explosion in June.
The sale to Peabody follows Anglo’s sale of its 33.3 per cent stake in Australia’s Jellinbah Group for $1.1bn, announced earlier this month. Anglo American’s shares rose 2 per cent in early trading in London on Monday.
Peabody chief executive Jim Grech said the transaction would allow Peabody, which has previously been mainly focused on producing thermal coal at facilities in the US, to transform its focus.
“This transformative transaction presents a rare opportunity for Peabody to acquire premier steelmaking coal assets at a compelling valuation as we reweight our portfolio toward seaborne metallurgical coal,” Grech said.
There had been reports that Peabody faced competition in the final round of bidding for the assets from Australian-listed miner Yancoal and Australia-based Stanmore Resources. More than a dozen potential bidders emerged at the start of the process in September, according to people familiar with the matter, despite the fire at the Grosvenor mine.
RBC analyst Marina Calero said that Anglo had secured a higher multiple than other similar recent transactions, albeit with part of the payment deferred.
“We see this as a positive event that will serve to reassure the market on management’s commitment to execute on the restructuring plan,” she wrote in a client note.
Metallurgical coal — used in making steel — is widely seen as having stronger future potential than the lower grade thermal coal used in power stations. Steelmakers have made less progress in replacing the dirty fuel than utilities, which are increasingly turning to alternatives such as wind and solar power.
Wanblad said that further divestments were “well in train”. The demerger of the company’s platinum interests was expected by “mid-2025” and the company had seen “strong interest” in its nickel business.
He said the De Beers diamond operations would follow nickel.
“We expect De Beers to follow, recognising its unmatched industry and brand position and good progress in working with stakeholders to position the business for long-term success as we work toward separation for value,” he said.
Wanblad has portrayed the divestment process as turning Anglo-American into a “viable, standalone company”, which will earn about 60 per cent of its revenue from producing copper.