Anglo American has entered into a definitive agreement to sell its steelmaking coal business for $4.9 billion (R88.60 billion).

Anglo American announced on Monday that it has now entered into definitive agreements to sell the entirety of its steelmaking coal business to generate up to $4.9 billion (R88.60 billion) in aggregate gross cash proceeds.

This includes the already announced sale of Anglo American’s interest in Jellinbah for approximately $1.1 billion (R19.89 billion).

Anglo American has agreed to sell its portfolio of steelmaking coal mines that it operates in Australia to Peabody Energy, a coal mining company headquartered in Missouri, US, for a cash consideration of up to $3.78 billion (R68.37 billion).

Anglo American CEO Duncan Wanblad said, “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.” 

“Through focus, asset quality and outstanding growth options, Anglo American will offer a highly differentiated investment proposition supported by strong cash generation and the capabilities and longstanding relationship networks that can deliver our full potential.” 

“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.”

Currently, Anglo American is the world’s third largest exporter of steelmaking coal, and its operations serve customers throughout Asia, Europe and South America.

This move to sell its steelmaking coal business is part of an ongoing restructuring Anglo American has undertaken.

“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,” Wanblad said. 

“We expect De Beers to follow, recognising its unmatched industry and brand position and good progress in working with stakeholders to position the business for long-term success as we work toward separation for value.” 

“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.”

He explained that, through a combination of this transaction and the agreement to sell its interest in Jellinbah, Anglo American stands to unlock up to $4.9 billion (R88.64 billion) of value.

Peabody President and CEO Jim Grech 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.”