Anglo American has agreed to divest its remaining steelmaking coal portfolio in Australia to Peabody Energy in an all-cash deal valued at up to $3.77bn.
According to Anglo American, the transaction marks a significant step in its strategy to restructure its business through the sale and divestment of non-core assets.
Under the terms of the definitive agreement, Peabody Energy will pay an upfront cash payment of $2.05bn at the closing of the deal.
The transaction also includes deferred payments totalling $725m over four annual instalments, a potential price-linked earnout of up to $550m, and $450m contingent on the reopening of the Grosvenor mine.
In addition, Peabody Energy has committed to a $75m deposit, which Anglo American may retain in certain circumstances if the deal falls through.
The steelmaking coal portfolio includes Anglo American’s majority interests in several joint ventures (JV) across the Bowen Basin in Queensland. These include an 88% stake in the Moranbah North JV, 70% of the Capcoal JV, 86.36% of the Roper Creek JV, and 50% of the Moranbah South JV.
Additionally, it encompasses a 51% stake in the Dawson JVs, including the Dawson South JV, Dawson South Exploration JV, and Theodore South JV.
These assets, which are spread across four metallurgical coal mines, namely Moranbah North, Grosvenor, Aquila, and Capcoal, are complementary to Peabody Energy’s existing Australian platform, including the Centurion mine.
Anglo American’s assets are projected to produce 11.3 million tonnes of steelmaking coal annually by 2026. Of this, around 80% is hard coking coal.
The mines have a combined marketable reserve of 306 million tonnes and an additional 1.7 billion tonnes of resources, with an average mine life exceeding 20 years.
Through the acquisition, Peabody Energy aims to enhance its metallurgical coal segment, increasing output from an estimated 7.4 million tonnes this year to 21–22 million tonnes by 2026.
Peabody Energy chief financial officer Mark Spurbeck said: “Subsequent to the transaction closing, we anticipate continuing our shareholder return program based on available free cash flow, while a portion of cash flows will be used to fund the transaction during the deferred payment period.
“Once we fully integrate the acquired metallurgical coal assets into our seaborne portfolio, we will have an even stronger platform to provide significant value upside to our shareholders.”
In a related transaction, the Dawson mine is being sold to Bukit Makmur Mandiri Utama, generating an additional $455m for Anglo American.
Combined with the sale of its interest in the Jellinbah coal mine for $1.1bn earlier this month, the total aggregate gross cash proceeds from these divestments are estimated at $4.9bn.
Anglo American chief executive Duncan Wanblad said: ““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 $4.9bn 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.”
Subject to regulatory approvals and customary conditions, the transaction is expected to be completed by Q3 2025.
