Anglo American to Unload Steelmaking Coal Business for US$4.9 Billion to Peabody

American PLC, a global mining giant, has reached a definitive agreement to divest its entire steelmaking coal business to Peabody Energy Corporation for a potential total cash consideration of up to US$3.8 billion. This transaction, coupled with the previously announced sale of Anglo American's stake in Jellinbah for approximately US$1.1 billion, is expected to generate up to US$4.9 billion in aggregate gross cash proceeds.

The steelmaking coal portfolio, primarily comprising interests in Australian mines, will be acquired by Peabody. The deal structure involves an upfront cash payment of US$2.05 billion, a deferred payment of US$725 million, a potential price-linked earnout of up to US$550 million, and a contingent payment of US$450 million tied to the reopening of the Grosvenor mine.

Duncan Wanblad, CEO of Anglo American, highlighted the strategic significance of this move, stating, "The sale of our steelmaking coal business is another crucial step towards our strategy of creating a world-class copper, premium iron ore, and crop nutrients business. By focusing on these core areas, we aim to deliver a highly differentiated investment proposition, supported by strong cash generation and our extensive capabilities."

Wanblad further emphasized the company's commitment to streamlining operations and unlocking value. He mentioned the ongoing demerger of Anglo American Platinum, the advanced stage of the nickel business sale process, and the planned separation of De Beers. Additionally, Anglo American is actively pursuing cost savings, targeting a reduction of US$1 billion and an additional US$800 million in pre-tax recurring cost benefits.

Jim Grech, President and CEO of Peabody, expressed enthusiasm about the acquisition, stating, "We are excited to acquire these world-class assets from Anglo American, a company that shares our commitment to safety, sustainability, and social responsibility. We look forward to integrating these assets, leveraging the skilled workforce, and collaborating with our joint venture partners to create long-term value."

The Steelmaking Coal Portfolio encompasses significant interests in several joint ventures, including Moranbah North, Capcoal, Roper Creek, Dawson, Dawson South, Theodore South, and Moranbah South. The transaction is subject to customary regulatory approvals and other conditions, with completion anticipated in the third quarter of 2025. Peabody has agreed to a US$75 million deposit upon signing, which Anglo American can retain under specific circumstances.

This strategic divestment marks a significant step for Anglo American as it reshapes its portfolio to focus on its core strengths. The transaction with Peabody is expected to generate substantial cash proceeds, bolstering the company's balance sheet and providing financial flexibility for future growth initiatives.