Anglo American said on Thursday it was engaging Peabody in discussions to finalise the disposal of its Australian steelmaking coal assets to the United States company for $3.7 billion.
Image: Reuters
Tawanda Karombo
Anglo American on Thursday it was engaging Peabody Energy in discussions to finalise the disposal of its Australian steelmaking coal assets to the United States-based company for $3.7 billion.
Although the transaction is still subject to outstanding customary conditions, fresh uncertainty has characterised the deal after an underground ignition event usually related to methane gas in coal mining at the Moranbah North Mine at the end of last month.
The incident has caused Anglo American to halt production at the mine, one of many up for disposal under the $3.7bn deal with Peabody.
“Anglo American continues to work with Peabody towards satisfying the remaining customary conditions in those agreements that are required for completion of the Transaction,” the Johannesburg and London listed miner said Thursday.
This followed indications by Peabody that it was reviewing all options related to the acquisition of Anglo American’s steelmaking coal assets in Australia following the ignition incident.
Peabody had also said that it “remains in conversation with Anglo American to better understand the impacts of the event” although it was “preserving all rights and protections” under its purchase agreements.
“Following an ignition event last week at Anglo American Plc's Moranbah North Mine, Peabody today announced that it is reviewing all options related to its acquisition of steelmaking coal assets from Anglo American,” said Peabody.
In response to this, Anglo American has said that it was “making progress in relation to the temporary suspension of mining operations” at the Moranbah North mine.
It said it believed that the incident reported at the mine was a minor ignition in the underground area of the mine although conditions in the mine had normalised shortly afterwards and they remained stable.
“Data and camera footage show no evidence of damage. Anglo American is working alongside industry experts and the safety regulator to expedite re-entry into the mine and the subsequent safe resumption of mining operations,” said the company.
The $3.7bn acquisition of some of Anglo American’s Australian steelmaking coal assets by Peabody is comprised of an upfront cash consideration of $2.05bn, a deferred cash consideration of $725 million, the potential for up to $550m in a price-linked earnout and contingent cash consideration of $450m linked to the reopening of the Grosvenor mine.
The upfront cash consideration is also subject to normal completion adjustments and completion is expected by the third quarter of 2025.
Anglo American will use the cash from the disposal of its steelmaking coal mines in Australia to strengthen its balance sheet as it forges ahead with a new strategy focusing on copper, premium iron ore and crop nutrients.
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