Key Points
- Anglo American is selling its steelmaking coal assets to Peabody Energy for up to $3.78 billion, including upfront, deferred, and contingent payments.
- Anglo aims to streamline its business by focusing on copper, premium iron ore, and crop nutrients.
- The deal reflects Peabody’s resurgence since its 2016 bankruptcy and its focus on the global metallurgical coal market.
- Anglo shares rose 2.9%, while Peabody shares declined 2.2% after the deal announcement.
Anglo American Plc has agreed to sell its steelmaking coal operations to Peabody Energy Corp. in a deal valued at up to $3.78 billion, signaling a significant step in the mining giant’s strategy to streamline its business. The sale includes $2.05 billion in upfront cash, $725 million in deferred payments, and an additional $1 billion contingent on coal prices and the reopening of the Grosvenor mine in Australia.
This transaction aligns with Anglo’s plan to focus on high-value commodities such as copper, premium iron ore, and crop nutrients. Chief Executive Officer Duncan Wanblad emphasized the move as a crucial milestone in the company’s transformation strategy. “This sale represents an important step towards delivering the world-class business portfolio we outlined earlier this year,” Wanblad said.
Anglo’s restructuring began after successfully fending off a $49 billion takeover attempt by BHP Group. The company aims to exit other sectors, including platinum and nickel, and eventually divest from De Beers, its diamond subsidiary. However, a slump in the diamond market has delayed that process.
The coal assets sold to Peabody include five mines in Queensland, Australia, which produced 16 million tons of coking coal in 2023. The deal will significantly enhance Peabody’s position in the global steelmaking coal market, boosting its metallurgical coal production to 22 million tons by 2026.
For Peabody, the acquisition marks a remarkable turnaround after its 2016 bankruptcy, caused by a collapse in coal prices due to the rise of cheap natural gas. Since then, Peabody has expanded its presence in the international metallurgical coal market, with this latest deal expected to position it among top producers such as BHP Mitsubishi Alliance and Glencore Plc.
Anglo’s divestment strategy also involves spinning off its majority stake in Anglo American Platinum Ltd. by next year and exiting nickel mining. However, plans for De Beers remain uncertain as Anglo waits for a rebound in the diamond market to ensure a favorable valuation. Following the announcement, Anglo shares rose 1.72% in London trading, while Peabody’s shares fell 2.59% in New York.
