Peabody Energy Cancels $3.8 Billion Acquisition of Anglo American's Australian Steelmaking Coal Business

Peabody Energy Corporation has cancelled its $3.8 billion acquisition of Anglo American's Steelmaking Coal Business in Australia due to an ignition event at Anglo's Moranbah North Mine, which has halted sustainable longwall production. The transaction was expected to close in mid-2025.

Peabody Energy Corporation (BTU.N) has terminated its $3.8 billion acquisition of Anglo American Plc's (AAL.L) steelmaking coal business in Australia, citing a material adverse change (MAC) due to an ignition event at Anglo's Moranbah North Mine. The event, which occurred in March, has halted sustainable longwall production at the mine [1][2][3].

The acquisition, initially scheduled to close in mid-2025, was part of Peabody's strategy to become a significant producer of steelmaking coal, a key raw material for the steel industry. However, the ignition event at Moranbah North triggered a clause in the acquisition agreement that allowed Peabody to break or renegotiate the deal if a significant negative event occurred between signing and completion [1][2][3].

Anglo American disputed the event's classification as a material adverse change, arguing that the mine and equipment sustained no significant damage and that progress was being made towards restarting operations. Despite these assertions, Peabody decided not to complete the transaction, stating that the two companies did not reach a revised agreement to cure the MAC [1][2].

Peabody's decision to terminate the transaction comes nearly five months after the ignition event. The mine was previously targeted to produce 5.3 million tons of saleable production in 2025, but there is no timetable for the resumption of longwall production at forecasted volumes and costs [2].

Peabody's President and Chief Executive Officer, Jim Grech, stated that the company's portfolio is well-positioned, with growing exposure to seaborne metallurgical coal. He outlined a four-pronged strategy for value creation, including managing safe and productive operations, returning a significant portion of available free cash flow to shareholders, leveraging the company's extensive asset portfolio for organic growth, and maintaining a resilient balance sheet [2].

Anglo American, on the other hand, expressed disappointment with Peabody's decision and reiterated its confidence in finding an alternative buyer through a new sales process. The London-listed miner has been selling or spinning off non-core assets to focus on copper and iron ore since BHP Group Ltd's (BHP.AX) failed attempt to take it over last year [1].

References:
[1] Reuters. (2025, Aug 19). Peabody Energy terminates bid for Anglo American's coking coal mines. Retrieved from https://www.reuters.com/business/energy/peabody-energy-terminates-bid-anglo-americans-coking-coal-mines-2025-08-19/
[2] PR Newswire. (2025, Aug 19). Peabody terminates planned acquisition with Anglo American. Retrieved from https://www.prnewswire.com/news-releases/peabody-terminates-planned-acquisition-with-anglo-american-302533365.html
[3] MarketScreener. (2025, Aug 19). Peabody Energy cancels acquisition of Anglo American's steelmaking coal business in Australia. Retrieved from https://www.marketscreener.com/news/peabody-energy-corporation-cancelled-the-acquisition-of-steelmaking-coal-business-in-australia-of-an-ce7c51dddb8afe21