Anglo American has agreed to sell its portfolio of steelmaking coal mines that it operates in Australia to Peabody Energy for a cash consideration of up to $3.78 billion.
Peabody’s agreed cash consideration 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.
The steelmaking coal portfolio under Anglo American consists primarily of an 88% interest in the Moranbah North joint venture; a 70% interest in the Capcoal joint venture; an 86.36% interest in the Roper Creek joint venture; a 51% interest in the Dawson joint venture, Dawson South joint venture, Dawson South Exploration venture.
The acquisition includes four metallurgical coal mines – Moranbah North, Grosvenor, Aquila and Capcoal – in Australia’s Bowen Basin, which is widely recognised for the world’s highest-quality steelmaking coal. Approximately 80% of the mines’ output is hard coking coal. The mines are complementary to Peabody’s existing Australian platform, the company says, including Centurion mine, and are expected to produce approximately 11.3 Mt of primarily hard coking coal in 2026. The acquired mines have an average mine life greater than 20 years with 306 Mt of marketable reserves and an additional 1,700 Mt of coal resources.
The acquisition is expected to transform Peabody’s metallurgical coal segment, increasing metallurgical coal production from an estimated 7.4 million tons in 2024 to an expected 21-22 Mt in 2026.
At the same time as Peabody and Anglo American announced this transaction, PT Delta Dunia Makmur Tbk, through its indirect subsidiary, PT Bukit Makmur Internasional (BUMA International), announced that it had entered into a binding agreement with Peabody subsidiary, Peabody SMC Pty. Ltd., to acquire that 51% interest in the Dawson Complex for $455 million, granting BUMA International a controlling interest in this mine.
Duncan Wanblad, Chief Executive of Anglo American, said: “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. 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. 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. 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.
“In steelmaking coal, through a combination of today’s announced transaction and our previously announced agreement to sell our interest in Jellinbah, we stand to unlock up to $4.9 billion of value, reflecting the high quality of the assets and adding to our balance sheet resilience. Peabody is a long-established and respected operator and we will work together and with our workforce, local communities, government, customers and partners to ensure a successful transition.”
Jim Grech, President and Chief Executive Officer of Peabody, added: “We’re pleased to acquire these world-class assets from Anglo American, a company that shares our strong values of safety, sustainability and social licence to operate. We look forward to integrating these assets, teaming up with their highly skilled workforce, and aligning with our new mine joint venture partners to create long-term value.”
The transaction is subject to a number of conditions, including customary competition and regulatory clearances, and pre-emption arrangements. The upfront cash consideration is subject to normal completion adjustments and completion is expected by the September 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 limited circumstances.