Anglo American to Sell Steelmaking Coal Business to Peabody Energy

Anglo American (LON: AAL) announced Monday that it has agreed to sell its entire steelmaking coal business to Peabody Energy for up to $3.8 billion.

The deal is part of Anglo American's strategy to create a world-class copper, premium iron ore and crop nutrients business.

The company revealed that the sale includes the Moranbah North, Capcoal, Roper Creek, Dawson, Dawson South, Theodore South, and Moranbah South joint ventures.

Peabody will pay an upfront cash consideration of $2.05 billion, with the potential for additional payments of up to $1.7 billion in deferred cash consideration, a price-linked earnout, and contingent cash consideration linked to the reopening of the Grosvenor mine.

Anglo American expects to generate up to $4.9 billion in total cash proceeds from the sale of its steelmaking coal business, including the previously announced sale of its interest in Jellinbah for approximately $1.1 billion.

“The sale of our steelmaking coal business is another important step towards delivering the strategy that we set out in May to create a world class copper, premium iron ore and crop nutrients business,” commented Duncan Wanblad, Chief Executive of Anglo American.

The transaction is expected to be completed by the third quarter of 2025.

The deal comes as part of Anglo's more comprehensive plan to restructure its business by selling and divesting unwanted assets after rejecting a $49 billion takeover bid from larger rival BHP Group earlier this year.

“All the transactions to deliver our portfolio transformation are well in train – the demerger of Anglo American Platinum is expected by mid-2025 and we have seen strong interest in our nickel business with the sale process well progressed. We expect De Beers to follow,” added Wanblad.

“We are well progressed with the delivery of $1 billion of cost savings and have detailed plans in place to deliver at least an additional $800 million in pre-tax recurring cost benefits on a run-rate basis from the end of 2025 as we progress the portfolio transformation.”