Anglo American sells its entire coking coal business in Australia for $4.9 bn

Anglo American has announced complete divestment of its coking coal business in Australia for $4.9 billion, with the sale of its remaining steelmaking coal business to Peabody Energy for $3.775 billion. 

Anglo American had earlier announced the sale of its interest in the Jellinbah coal mines for around $1.1 billion, which takes the combined proceeds to nearly $4.9 billion. 

Under the agreement, Peabody will pay up to $2.05 billion upfront on completion and $725 million in deferred cash payment, besides $550 million in potential price-linked earnings and contingent cash payment of $450 million on reopening of the Grosvenor mine.

Anglo American’s steelmaking coal portfolio brings together an 88 per cent interest in the Moranbah North joint venture, a 70 per cent interest in the Capcoal joint venture, an 86.36 per cent stake in the Roper Creek joint venture, a 51 per cent interest in three joint ventures with Dawson, besides the Theodore and Moranbah joint ventures.

The divestment of coal assets is part of Anglo American’s strategy of creating a company focused on copper, premium iron and crop nutrients business, said Duncan Wanblad, CEO of Anglo American.

He said, the renewed focus on core strengths will improve asset quality and bring outstanding growth options, making Anglo American a highly differentiated investment. Besides a simple, agile and resilient business model will support cash generation and realisation of full potential, he added. 

Anglo American expects to complete the demerger of its platinum business by the middle of next year with the sale of its nickel business.

Further, he said, the focus will shift to De Beers. Anglo American hopes to work with stakeholders to realise the full potential of its brand position.

These will result in savings of $1 billion in annual costs and another $800 million in pre-tax recurring cost benefits from the end of 2025, he pointed out.

Anglo American, he said, will ensure a smooth business transition to Peabody, an established and respected power sector operator, with support from workers, local communities, government, customers and partners, the CEO added.

The transaction, which is subject to various conditions, including customary and regulatory clearances, and pre-emption arrangements, is expected to be completed by the third quarter of 2025.

Peabody will provide a $75 million deposit as guarantee on signing of the contract.