Anglo American selling Australian coal mines to Peabody Energy for up to $3.8 bn

Investing.com -- Anglo American (JO:AGLJ ) on Monday announced the sale of its steelmaking coal business, including its Australian coal mines, to Peabody Energy (NYSE:BTU )for up to $3.8 billion. 

This deal forms part of a larger strategic move by Anglo American to reshape its business, focusing on high-value areas such as copper , premium iron ore, and crop nutrients. 

The transaction includes cash proceeds of up to $4.9 billion, with US$1.1 billion already raised from the earlier sale of Anglo’s interest in Jellinbah.

The sale to Peabody Energy covers Anglo American's entire steelmaking coal portfolio in Australia. 

“We see potential for a material re-rating in the medium-term as Anglo delivers on its restructuring plan, leaving a simplified portfolio with a 60% exposure to copper,” said analysts at RBC Capital Markets in a note.

This includes a range of joint ventures, such as an 88% stake in the Moranbah North joint venture, a 70% stake in the Capcoal joint venture, and several others spread across the region. 

The terms of the deal include an upfront payment of $2.05 billion at completion, with additional payments based on performance and other contingencies, including up to $550 million linked to market prices and $450 million tied to the reopening of the Grosvenor mine.

Anglo American’s decision to exit the steelmaking coal sector aligns with its broader strategy of streamlining its operations and focusing on businesses that promise stronger long-term growth potential. 

The company has been actively restructuring, with plans to spin off its platinum division and potentially sell its nickel assets. 

Anglo American’s CEO, Duncan Wanblad in a statement said that this transformation is aimed at creating a simpler, more resilient business that can fully leverage its market position and generate stronger cash flows.

The transaction is still subject to regulatory approval and other conditions. Completion is expected by the third quarter of 2025, with Peabody having already made a $75 million deposit. 

Shares of Anglo American was up 1.5% at 5:15 ET (10:15 GMT).

Source: Investing.com