Accelerate the restructuring! Anglo American (NGLOY.US) to sell its coking coal business for $3.78 billion
1min read Anglo American PLC (NGLOY.US) said it has agreed to sell its coking coal business to Peabody Energy Corp. for up to $3.78bn as the company accelerates its restructuring.
The Anglo American share price rose as much as 2.9 per cent in London trading.
The sale of the coal business is seen as the most direct first step in a process that also includes exiting platinum and nickel and selling or spinning off De Beers. But the process has been stalled by the explosion and fire at the Gruvner mine, the largest of the company’s five Australian coal operations.
Duncan Wanblad, Anglo American’s chief executive, said in a statement announcing the sale on Monday: “The sale of the coking coal business is another important step in our strategy to create a world-class copper, high-quality iron ore and crop nutrition business, which we set out in May.”
Anglo American said it would receive a $2.05bn upfront payment from Peabody, as well as a further $725m in deferred payments. It could also receive $550m (depending on coal prices) and $450m (depending on the reopening of the Gruvner mine).
Anglo American’s business spans five coal mines in Queensland, which produced 16m tonnes of coking coal in 2023. Dozens of potential buyers were vying for the assets. Anglo American had previously sold a stake in another Australian mine for $1.05bn.
For Peabody, the deal will help it move closer to the handful of producers that dominate the seaborne coking coal market. BHP Mitsubishi Alliance and Glencore are the largest producers.
It also marks a major turnaround for Peabody, which filed for bankruptcy protection in 2016 as one of the US mining companies hit by cheap natural gas prices.
Since then, Peabody has sought to develop in the international coking coal market and tried to buy other Australian assets in 2022.
Anglo American is currently focused on spinning off its majority stake in Anglo American Platinum Ltd, which is expected to be completed next year. It is also planning to exit its nickel mining business.
The sharp decline in the diamond market has complicated plans to sell or spin off De Beers. Anglo American would prefer to wait for a market recovery, as it believes De Beers should be valued for its iconic status.