Peabody will acquire Anglo American’s steel and coal assets in Australia for $2.32 billion.

US coal producer Peabody Energy has agreed to acquire coal-fired steel assets being sold by British-South African miner Anglo American as it exits the coal industry.

The $2.32 billion deal includes four high-grade coal mines in Australia’s Bowen Basin – Moranbah North, Grosvenor, Aquila and Capcoal.

Cash consideration for the acquisition is $1.69 billion at closing and deferred payments of $625 million over four years.

Additional contingency payments of up to $1 billion were also agreed upon, subject to favorable future developments.

The acquisition, expected to be completed by mid-2025, is expected to increase Peabody’s production from approximately 7.4 million tonnes in 2024 to 21-22 million tonnes by 2026.

Peabody President and CEO Jim Grech stated, “This transformative transaction provides Peabody with a rare opportunity to acquire leading steel-based coal assets at an attractive price as we re-value our portfolio toward offshore metallurgical coal mining.

“The transaction is strategically focused, immediate and highly synergistic, which will allow us to better serve the best demand centers for metallurgical coal in the world. This transaction provides us with a strong foundation for the company’s long-term success.”

It is expected that in 2026 the acquired mines will produce approximately 11.3 million tons of predominantly hard coking coal.

With an average mine life of more than 20 years, these assets contain 306 million tons of commodity reserves and a further 1.7 billion tons of coal reserves.

This strategic move is aimed at increasing Peabody’s presence in premium hard coking coal and high-growth markets, particularly in Asia where demand for steel is growing.

Peabody expects to realize approximately $100 million in annual synergies, increase earnings and improve its financial profile through the transaction.

Additionally, the acquisition is consistent with Peabody’s sustainability goals, including shifting the proportion of its portfolio toward steel-based coal and establishing new long-term emissions reduction goals.

Peabody has entered into a bridge loan for the acquisition and plans to maintain a marginal debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) ratio of approximately 1.5 times.

Completion of the acquisition is subject to regulatory approvals, minority rights of priority and other customary closing conditions.

Anglo American has also agreed to sell the Dawson mine in central Queensland to PT Bukit Makmur Mandiri Utama in a follow-on deal for $455 million.

Earlier this month, Anglo American agreed to sell Zashvin its 33.3% stake in the Jellinbah Group, a joint venture that owns 70% of the Jellinbah East and Lake Vermont steel coal mines in Australia, for A$1.6 billion ($1.1 billion).

The post “Peabody to acquire Anglo American’s Australian coal steel assets for $2.32 billion” was originally created and published by Mining Technology, a brand owned by GlobalData.

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