Peabody to Purchase Tier 1 Australian Metallurgical Coal Assets from Anglo American

Peabody has announced an agreement to acquire premier steelmaking coal assets from Anglo American plc, significantly advancing its strategy to focus on seaborne metallurgical coal. The deal, expected to close in mid-2025, includes a cash payment of $2.32 billion, with $1.695 billion payable at closing and $625 million in deferred payments spread over four years. Additionally, Peabody has agreed to contingent payments of up to $1 billion, depending on future favorable events. Anglo American will also receive $455 million from PT Bukit Makmur Mandiri Utama (BUMA) through a separate transaction involving the Dawson Mine.

This acquisition includes four metallurgical coal mines—Moranbah North, Grosvenor, Aquila, and Capcoal—located in Australia’s Bowen Basin, known for producing some of the world’s highest-quality steelmaking coal. Approximately 80% of the mines’ output consists of hard coking coal, with an estimated 11.3 million tons of production in 2026. These mines complement Peabody’s existing Australian assets, including the Centurion Mine, and have a combined marketable reserve of 306 million tons and an additional 1.7 billion tons of coal resources. With an average mine life exceeding 20 years, the acquisition is set to boost Peabody’s metallurgical coal production from 7.4 million tons in 2024 to 21-22 million tons by 2026.

The transaction presents numerous strategic and financial benefits. It increases Peabody’s exposure to premium hard coking coal, essential for meeting rising demand in key Asian markets, which have driven global steel demand growth. The proximity of the acquired mines to these markets creates substantial opportunities to serve customers better. Peabody anticipates annual synergies of approximately $100 million, which will be realized through efficiencies in office operations, administrative savings, and marketing opportunities. The acquisition is expected to enhance Peabody’s margins, with an anticipated Adjusted EBITDA margin of $65 to $70 per ton on the 11.3 million tons of coal from the acquisition.

Furthermore, the deal strengthens Peabody’s financial position. The company expects meaningful accretion to cash flows and anticipates an attractive 3.1x enterprise-value-to-EBITDA multiple based on 2026 projections. Peabody also sees the acquisition as a potential catalyst for a favorable re-rating of its valuation, given the stronger market multiples for metallurgical coal producers.

Peabody’s commitment to sustainability is reflected in the deal, which aligns with its ongoing efforts to reduce emissions and enhance environmental responsibility. The company is also pursuing joint ventures to develop solar power and battery storage on former mine sites.

The acquisition is subject to regulatory approvals and other customary closing conditions, with Peabody securing a bridge facility to finance the transaction. The deal is structured with a mix of upfront and deferred payments, along with contingent payments based on the successful restart of Grosvenor and a revenue-sharing agreement over five years.