Anglo American's Coal Deal Collapses Amid Mine Fire Dispute

Peabody Energy has withdrawn from its $3.8 billion deal to acquire Anglo American's steelmaking coal business after a fire at an Australian mine. The US coal producer cited a material adverse change, while Anglo disputed the impact of the incident. The deal's collapse is a major setback for Anglo, which is simplifying and shrinking its business. Anglo has already spun off its platinum business and is seeking a buyer for its diamond division.

Peabody Energy has terminated its $3.78 billion bid for Anglo American's Australian coking coal mines, citing a "material adverse change" related to the coal assets [1]. The U.S. coal producer, Peabody Energy, made the announcement on Tuesday, stating that the fire at the Moranbah North mine in March 2025 constituted such a change.

The fire at Moranbah North mine has been a point of contention between Peabody and Anglo American. Peabody argued that the incident constituted a material adverse change that warranted pulling out of the deal, while Anglo American disputed the impact of the fire, claiming that there was no significant damage to the mine or equipment [2].

The collapse of the deal is a significant setback for Anglo American, which had planned to sell the coal assets as part of its restructuring efforts. The company aims to simplify and shrink its business, focusing more on copper and iron ore. The deal with Peabody was seen as a major early win for Anglo, potentially bringing in substantial cash and demonstrating progress to investors.

Anglo American has already spun off its platinum business and is looking for a buyer for its struggling De Beers diamond division. The company remains confident in its legal position and ability to find alternative buyers. However, the resale process would take place against a backdrop of weaker coal prices over the past year, fueling uncertainty over whether Anglo could secure terms as good as it had with Peabody.

Jefferies LLC analysts have noted that both sides are confident in their legal positions, suggesting a potential long arbitration process could be an overhang on the shares of both companies [2].

References:
[1] Reuters. (2025). Peabody Energy Terminates Bid for Anglo American's Australian Coking Coal Mines. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3UB0PG:0-peabody-energy-terminates-bid-for-anglo-american-s-australian-coking-coal-mines/
[2] Bloomberg. (2025). Peabody to Pull Out of $3.8 Billion Deal for Anglo's Coal Assets. Retrieved from https://www.bloomberg.com/news/articles/2025-08-19/peabody-to-pull-out-of-3-8-billion-deal-for-anglo-s-coal-assets