Anglo American to Sell Steelmaking Coal Portfolio to Peabody for US$3.78 Billion

Anglo American (LSE:AAL,OTCQX:AAUKF) said on Monday (November 25) that it has entered into definitive agreements to sell its entire steelmaking coal business in Australia to Peabody Energy (NYSE:BTU).

The portfolio primarily consists of an 88 percent interest in the Moranbah North joint venture, a 70 percent interest in the Capcoal joint venture and an 86.36 percent interest in the Roper Creek joint venture.

It also includes a 51 percent stake in the Dawson joint venture, the Dawson South joint venture, the Dawson South Exploration joint venture and the Theodore South joint venture, plus 50 percent of the Moranbah South joint venture.

“(This) sale 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,” said Anglo Chief Executive Duncan Wanblad.

The company said it will generate up to US$4.9 billion in aggregate gross cash proceeds from the Peabody transaction, along with the sale of its interest in Jellinbah Group to Zashvin for approximately US$1.1 billion.

The Peabody deal will amount to up to US$3.78 billion for Anglo, with upfront cash consideration of US$2.05 billion at completion. Anglo will also receive deferred cash consideration of US$725 million four annual installments.

In addition, the agreement covers the potential for up to US$550 million in a price-linked earnout, and contingent cash consideration of US$450 million connected to the reopening of the Grosvenor mine.

“We’re pleased to acquire these world-class assets from Anglo American, a company that shares our strong values of safety, sustainability and social license to operate,” commented Peabody President and CEO Jim Grech.

“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," he added.

The transaction between Anglo and Peabody is subject to certain conditions, such as customary competition and regulatory clearances and pre-emption arrangements. Peabody has agreed to pay a US$75 million deposit on signing, which Anglo is entitled to keep should the sale be terminated under limited circumstances.

Anglo is in the midst of a portfolio transformation, and said that all transactions related to these changes are in place. The demerger of Anglo American Platinum (OTC Pink:AGPPF,JSE:AMS) is expected by mid-2025.

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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.