Anglo American sells last of its steelmaking coal business

Anglo American will sell its remaining Australian steelmaking coal operations to Peabody Energy for up to $3.8 billion as it restructures operations to fend off takeover bids.
The FTSE 100 mining group has been overhauling its business to focus on copper and iron ore assets after being targeted with a £39 billion takeover offer from BHP earlier this year.
BHP’s abortive bid for Anglo came as the industry races to secure mines producing the copper required for a global shift to renewable technologies such as wind farms and electric vehicles. Anglo has become an attractive target as it owns mines in Peru and Chile which can produce around 760,000 tonnes of copper annually.
Anglo’s latest deal comes after it sold a separate stake in steelmaking coal mines in Queensland for £850 million to Sam Chong, a billionaire from Brisbane. The group offloaded a 33 per cent holding in Jellinbah Group, the joint venture that owns a 70 per cent interest in the Jellinbah East and Lake Vermont mines.
Duncan Wanblad, chief executive of Anglo, said on Monday: “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.
“We are absolutely focused on delivering that strategy and unlocking the associated value as we streamline our cost structures and create a much simpler, more resilient and more agile business that will enable full market value recognition.”
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Peabody, a US-based coalmining group, will pay cash of $2.05 billion up front for the assets, with a further cash consideration of $725 million to be paid in instalments. Peabody will also make further payments of up to $1 billion to Anglo based on the earnings delivered by the coal operations and the reopening of the Grosvenor mine, which was shut down by a fire in July.
Jim Grech, chief executive of Peabody, said: “We’re pleased to acquire these world-class assets from Anglo American, a company that shares our strong values of safety, sustainability and social license to operate.
“We look forward to integrating these assets, teaming up with their highly skilled workforce, and aligning with our new mine joint venture partners to create long-term value.”
Anglo American’s shares were up by 1.7 per cent to £23.98 in morning trading on Monday.
BHP announced in April that it had sold Blackwater and Daunia, its coking coal businesses, for up to $4.1 billion, and Teck Resources, a Canadian mining group, has offloaded its steelmaking coal operations to Glencore for $6.9 billion.
Glencore had been weighing up a spin-off for its coal division to focus on copper but decided against the move this summer following a consultation with its shareholders.
Gary Nagle, Glencore’s chief executive, said the “overwhelming feedback” from investors was that it would be better for the environment if the FTSE 100 miner retained its coal division. He said Glencore had a “responsible run-down strategy” for its thermal coal business, which might not be replicated by a rival operator.
The company has said it will use the cash generated from coal production the fund investment into metals used for green infrastructure.