Anglo American Completes Sale of Its Steelmaking Coal Operations
Anglo American has finalized the sale of its last Australian steelmaking coal assets to Peabody Energy in a deal valued at up to $3.8 billion, part of its strategic restructuring efforts amidst potential takeover offers.
The London-based mining giant, part of the FTSE 100, is shifting its focus towards copper and iron ore while responding to a massive £39 billion acquisition proposal received from BHP earlier this year.
BHP’s failed bid highlights the heightened competition in the mining sector as companies strive to secure the copper resources vital for the transition to renewable energy, including electric vehicles and wind farms. With copper production capabilities of around 760,000 tonnes annually from its mines in Peru and Chile, Anglo American has become a coveted asset.
This latest transaction follows Anglo’s recent divestment of a 33 percent stake in Queensland’s steelmaking coal operations for £850 million to Brisbane billionaire Sam Chong, which involved the Jellinbah Group that holds a 70 percent interest in Jellinbah East and Lake Vermont mines.
Duncan Wanblad, CEO of Anglo American, stated on Monday: “The divestiture of our steelmaking coal business is a significant milestone in our strategy established in May to cultivate a premier business focused on copper, high-quality iron ore, and agricultural nutrients.”
Wanblad emphasized the company’s commitment to executing this strategy, aiming to enhance value by streamlining operations and fostering a more resilient and agile organizational structure for better market standing.
As part of the agreement, Peabody will make an initial cash payment of $2.05 billion, followed by an additional $725 million in future installments. Moreover, Peabody could pay up to $1 billion depending on the profitability of the coal operations, as well as the reopening of the Grosvenor mine, which was closed due to a fire in July.
Jim Grech, the CEO of Peabody, remarked: “We are excited to acquire these exceptional assets from Anglo American, a company that aligns with our principles of safety, sustainability, and responsible operations.”
He added that Peabody is eager to leverage these assets alongside their skilled workforce and new joint venture partners to foster long-term success.
Anglo American saw its shares increase by 1.7 percent to £23.98 in early trading on Monday.
Earlier this year in April, BHP disclosed the sale of its coking coal operations, Blackwater and Daunia, for up to $4.1 billion, while Canadian miner Teck Resources offloaded its steelmaking coal assets to Glencore for $6.9 billion.
Although Glencore contemplated separating its coal division to prioritize its copper operations, it opted against this strategy after consulting with shareholders over the summer. CEO Gary Nagle noted that investor feedback indicated a preference for maintaining the coal division to enhance environmental stewardship. He affirmed Glencore’s commitment to a responsible closure strategy for its thermal coal operations, which may not be matched by competing firms.
Glencore plans to reinvest the revenue generated from coal into metals essential for sustainable infrastructure development.
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