Anglo American Sells Steelmaking Coal Business for Up to $4.9 Billion

Anglo American Sells Steelmaking Coal Business for Up to $4.9 Billion

(IN BRIEF) Anglo American has agreed to sell its steelmaking coal portfolio, including its Australian mines, to Peabody Energy for up to $3.775 billion, with total proceeds from this and a prior Jellinbah sale expected to reach $4.9 billion. The deal includes upfront, deferred, and contingent payments, with completion anticipated by Q3 2025, pending regulatory approvals. This sale aligns with Anglo American’s strategy to focus on copper, premium iron ore, and crop nutrients while streamlining its operations. Peabody aims to integrate these high-quality assets into its operations, emphasizing safety, sustainability, and long-term value creation.

(PRESS RELEASE) LONDON, 25-Nov-2024 — /EuropaWire/ — Anglo American has finalized agreements to divest its steelmaking coal portfolio, marking a significant step in its strategy to focus on copper, premium iron ore, and crop nutrients. The sale, including a previously announced $1.1 billion deal for its Jellinbah stake, could generate up to $4.9 billion in gross cash proceeds.

Peabody Energy will acquire Anglo American’s Australian steelmaking coal mines for up to $3.775 billion, including $2.05 billion upfront, $725 million in deferred payments, a $550 million price-linked earnout, and $450 million contingent on reopening the Grosvenor mine. Completion is expected by Q3 2025, pending regulatory approvals.

Duncan Wanblad, CEO of Anglo American, highlighted the transaction as part of the company’s broader portfolio transformation:
“This sale reflects the high quality of our assets and strengthens our balance sheet. It supports our shift toward building a streamlined and resilient business focused on our core growth areas while delivering cost efficiencies.”

Peabody CEO Jim Grech welcomed the acquisition:
“These assets align with our values of safety, sustainability, and social responsibility. We look forward to collaborating with Anglo American and leveraging these world-class resources to create long-term value.”

The steelmaking coal portfolio includes interests in multiple joint ventures, such as Moranbah North, Capcoal, and Dawson, with varying ownership percentages. Anglo American has also outlined plans for continued portfolio transformation, including the demerger of Anglo American Platinum by mid-2025 and progressing the sale of its nickel business.

This divestment positions Anglo American to enhance its focus on strategic commodities while advancing its growth and sustainability goals.

Anglo American has agreed to sell its steelmaking coal portfolio, including its Australian mines, to Peabody Energy for up to $3.775 billion, with total proceeds from this and a prior Jellinbah sale expected to reach $4.9 billion. The deal includes upfront, deferred, and contingent payments, with completion anticipated by Q3 2025, pending regulatory approvals. This sale aligns with Anglo American’s strategy to focus on copper, premium iron ore, and crop nutrients while streamlining its operations. Peabody aims to integrate these high-quality assets into its operations, emphasizing safety, sustainability, and long-term value creation.

Footnotes:

1 Total non-contingent net proceeds from the sale of the Jellinbah interest and this Transaction are estimated to be approximately US$3.6 billion.

2 The deferred cash consideration will be paid in four instalments occurring annually from the first anniversary of the transaction completion date, as follows: payment 1: US$111.2 million; payment 2: US$225.8 million; payment 3: US$225.8 million; payment 4: US$162.2 million.

3 The price-linked earnout comprises uncapped quarterly payments of up to US$550 million in aggregate, applicable for five years starting from the first day of the quarter following the transaction completion date. The quarterly payment will be calculated as 35% of incremental revenue from equity coal production (excluding Dawson) above agreed metallurgical and thermal coal prices. The precise trigger prices above which payments are made differ by product, but broadly align to PLV HCC Benchmark prices of: Year 1 US$240/t; Year 2 US$235/t; Year 3 US$240/t; Year 4 US$246/t; Year 5 US$252/t.

4 The contingent cash consideration comprises a US$250 million payment due one month after the reopening of the Grosvenor mine, defined as the earlier of i) first sale of coal from longwall coal production from the Grosvenor mine; or ii) 1.5 Mt of cumulative run-of-mine coal production from the Grosvenor mine, and a US$200 million payment on the second anniversary of the reopening of the Grosvenor mine.

Notes to editors:

Anglo American is a leading global mining company focused on the responsible production of copper, premium iron ore and crop nutrients – future-enabling products that are essential for decarbonising the global economy, improving living standards, and food security. Our portfolio of world-class operations and outstanding resource endowments offers value-accretive growth potential across all three businesses, positioning us to deliver into structurally attractive major demand growth trends.

Our integrated approach to sustainability and innovation drives our decision-making across the value chain, from how we discover new resources to how we mine, process, move and market our products to our customers – safely, efficiently and responsibly. Our Sustainable Mining Plan commits us to a series of stretching goals over different time horizons to ensure we contribute to a healthy environment, create thriving communities and build trust as a corporate leader. We work together with our business partners and diverse stakeholders to unlock enduring value from precious natural resources for our shareholders, for the benefit of the communities and countries in which we operate, and for society as a whole. Anglo American is re-imagining mining to improve people’s lives.

Anglo American is currently implementing a number of major structural changes to unlock the inherent value in its portfolio and thereby accelerate delivery of its strategic priorities of Operational excellence, Portfolio simplification, and Growth. This portfolio transformation will focus Anglo American on its world-class resource asset base in copper, premium iron ore and crop nutrients, once the sale of our steelmaking coal and nickel businesses, the demerger of our PGMs business (Anglo American Platinum), and the separation of our iconic diamond business (De Beers) have been completed.

www.angloamerican.com

Group terminology

In this document, references to “Anglo American”, the “Anglo American Group”, the “Group”, “we”, “us”, and “our” are to refer to either Anglo American plc and its subsidiaries and/or those who work for them generally, or where it is not necessary to refer to a particular entity, entities or persons. The use of those generic terms herein is for convenience only, and is in no way indicative of how the Anglo American Group or any entity within it is structured, managed or controlled. Anglo American subsidiaries, and their management, are responsible for their own day-to-day operations, including but not limited to securing and maintaining all relevant licences and permits, operational adaptation and implementation of Group policies, management, training and any applicable local grievance mechanisms. Anglo American produces group-wide policies and procedures to ensure best uniform practices and standardisation across the Anglo American Group but is not responsible for the day to day implementation of such policies. Such policies and procedures constitute prescribed minimum standards only. Group operating subsidiaries are responsible for adapting those policies and procedures to reflect local conditions where appropriate, and for implementation, oversight and monitoring within their specific businesses.

Disclaimer

This document is for information purposes only and does not constitute, nor is to be construed as, an offer to sell or the recommendation, solicitation, inducement or offer to buy, subscribe for or sell shares in Anglo American or any other securities by Anglo American or any other party. Further, it should not be treated as giving investment, legal, accounting, regulatory, taxation or other advice and has no regard to the specific investment or other objectives, financial situation or particular needs of any recipient.

Forward-looking statements and third party information

This document includes forward-looking statements. All statements other than statements of historical facts included in this document, including, without limitation, those regarding Anglo American’s financial position, business, acquisition and divestment strategy, dividend policy, plans and objectives of management for future operations, prospects and projects (including development plans and objectives relating to Anglo American’s products, production forecasts and Ore Reserve and Mineral Resource positions) and sustainability performance related (including environmental, social and governance) goals, ambitions, targets, visions, milestones and aspirations, are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such forward-looking statements are based on numerous assumptions regarding Anglo American’s present and future business strategies and the environment in which Anglo American will operate in the future. Important factors that could cause Anglo American’s actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, unanticipated downturns in business relationships with customers or their purchases from Anglo American, mineral resource exploration and project development capabilities and delivery, recovery rates and other operational capabilities, safety, health or environmental incidents, the effects of global pandemics and outbreaks of infectious diseases, the impact of attacks from third parties on our information systems, natural catastrophes or adverse geological conditions, climate change and extreme weather events, the outcome of litigation or regulatory proceedings, the availability of mining and processing equipment, the ability to obtain key inputs in a timely manner, the ability to produce and transport products profitably, the availability of necessary infrastructure (including transportation) services, the development, efficacy and adoption of new or competing technology, challenges in realising resource estimates or discovering new economic mineralisation, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, liquidity and counterparty risks, the effects of inflation, terrorism, war, conflict, political or civil unrest, uncertainty, tensions and disputes and economic and financial conditions around the world, evolving societal and stakeholder requirements and expectations, shortages of skilled employees, unexpected difficulties relating to acquisitions or divestitures, competitive pressures and the actions of competitors, activities by courts, regulators and governmental authorities such as in relation to permitting or forcing closure of mines and ceasing of operations or maintenance of Anglo American’s assets and changes in taxation or safety, health, environmental or other types of regulation in the countries where Anglo American operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American’s most recent Annual Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this document. Anglo American expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers, the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Conduct Authority, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SIX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and any other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Anglo American’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Nothing in this document should be interpreted to mean that future earnings per share of Anglo American will necessarily match or exceed its historical published earnings per share. Certain statistical and other information included in this document is sourced from third party sources (including, but not limited to, externally conducted studies and trials). As such it has not been independently verified and presents the views of those third parties, but may not necessarily correspond to the views held by Anglo American and Anglo American expressly disclaims any responsibility for, or liability in respect of, such information.

Media Contacts:

SOURCE: Anglo American