British multinatinaional mining giant Anglo American has sold its Australia-based steelmaking coal business to US coal miner Peabody Energy for around $3.8 billion
Peabody’s agreed cash consideration of up to $3.775 billion comprises an upfront cash consideration of $2.05 billion at completion; deferred cash consideration of $725 million; the potential for up to $550 million in a price-linked earnout; and contingent cash consideration of $450 million linked to the reopening of the Grosvenor mine in Queensland which was suspended earlier this year after a fire.
Peabody Energy, headquartered in Missouri, said in a statement the move will help it meet increasing demand from Asian markets, which it says “represents the entire growth in global steel demand over the past decade” and the “vast majority” of all projected growth in metallurgical coal demand through 2050.
The acquired assets’ coal quality will also upgrade Peabody’s metallurgical coal platform. Assuming consensus hard coking coal prices of $225 per metric ton, Peabody anticipates adjusted EBITDA margins of $65 to $70 per ton on the anticipated 11.3 million tons of 2026 coal sales attributable to the acquisition.
The steelmaking coal portfolio is based in Australia and includes a number of metallurgical coal mines in Queensland, Australia. The assets include an 88% interest in the Moranbah North (Brisbane) joint venture (JV); a 70% interest in a Capcoal JV (central Queensland); an 86.36% interest in the Roper Creek JV (Brisbane); a 51% interest in the Dawson JV, Dawson South JV, Dawson South Exploration JV (all in central Queensland), and of which Mitsui Holdings own the other 49%, and the Theodore South JV (Brisbane); and a 50% interest in a Moranbah South JV, of which Exxaro Resources owns the other 50% (Queensland).
Duncan Wanblad, chief executive of Anglo American, said in a statement: “The sale of our steelmaking coal business is another important step towards delivering the strategy that we set out in May to create a world class copper, premium iron ore and crop nutrients business. Through focus, asset quality and outstanding growth options, Anglo American will offer a highly differentiated investment proposition supported by strong cash generation and the capabilities and longstanding relationship networks that can deliver our full potential.”
Anglo American, which is listed on the FTSE 100, has been making changes to its business after rejecting several audacious takeover attempts by Australia’s BHP earlier this year.
Wanblad added: “We are absolutely focused on delivering that strategy and unlocking the associated value as we streamline our cost structures and create a much simpler, more resilient and more agile business that will enable full market value recognition. All the transactions to deliver our portfolio transformation are well in train – the demerger of Anglo American Platinum is expected by mid-2025 and we have seen strong interest in our nickel business with the sale process well progressed.”
He continued: “We expect [diamond firm] 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. We are well progressed with the delivery of $1 billion of cost savings and have detailed plans in place to deliver at least an additional $800 million in pre-tax recurring cost benefits on a run-rate basis from the end of 2025 as we progress the portfolio transformation.”
Goldman Sachs advised Anglo American on the sale to Peabody Energy. The transaction is subject to a number of conditions, including competition and regulatory clearances, and pre-emption arrangements. The upfront cash consideration is subject to normal completion adjustments and completion is expected by the third quarter of 2025. Peabody has agreed to pay a $75 million deposit on signing which Anglo American is entitled to retain if the sale is terminated in certain circumstances.
BUMA deal with Peabody
In another deal connected with the larger one, Indonesia’s Delta Dunia Makmur, through its indirect subsidiary, Bukit Makmur Internasional (BUMA International), has entered into a binding agreement with Peabody to acquire a 51% interest in the Dawson Complex (Dawson) for $455 million, handing BUMA International a controlling interest in one of Australia’s largest metallurgical coal mines.
The Dawson Complex has a production capacity of over eight million tonnes per annum (Mtpa) with established infrastructure and well-known products which receive strong demand from key steelmaking markets in Asia. The mine has reserves to support a mine life of over 20 years, and a resource life to support a mine life of over 50 years.
The proposed acquisition advances the group’s strategy to diversify its portfolio and reduce its overall dependence on thermal coal.
The completion of the acquisition is contingent upon Peabody’s acquisition of the Dawson Complex from Anglo American.
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