US coal producer Peabody Energy has agreed to purchase steel-making coal assets being divested by UK-South African mining company Anglo American as it exits the coal industry.
The $2.32bn transaction includes four high-grade coal mines in Australia’s Bowen Basin – Moranbah North, Grosvenor, Aquila and Capcoal.
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The cash consideration for the acquisition comprises $1.69bn at closing and deferred payments of $625m over four years.
Additional contingent payments of up to $1bn have also been agreed upon, dependent on favourable future events.
Due to be finalised by mid-2025, this acquisition is projected to increase Peabody’s production from an estimated 7.4mt in 2024 to 21–22mt by 2026.
Peabody president and CEO Jim Grech said: “This transformative transaction presents a rare opportunity for Peabody to acquire premier steel-making coal assets at a compelling valuation as we reweight our portfolio toward seaborne metallurgical coal.
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By GlobalData“The transaction is strategically aligned, immediately accretive and highly synergistic, positioning us to better serve the best metallurgical coal demand centres in the world. This transaction gives us a strong foundation to position the company for long-term success.”
The acquired mines are expected to yield around 11.3mt of primarily hard coking coal in 2026.
With an average mine life of more than 20 years, these assets hold 306mt of marketable reserves and a further 1.7 billion tonnes of coal resources.
The strategic move is set to increase Peabody’s exposure to premium hard coking coal and high-growth markets, particularly in Asia, where steel demand has been rising.
Peabody expects to realise approximately $100m per year in synergies, enhance margins and improve its financial profile through the deal.
Furthermore, the acquisition aligns with Peabody’s sustainability goals including reweighting its portfolio towards steelmaking coal and establishing new long-term emission-reduction targets.
Peabody has secured a bridge facility for the acquisition and plans to maintain a debt-to-EBITDA (earnings before interest, taxes, depreciation and amortisation) ratio ceiling of approximately 1.5 times.
Regulatory approvals, clearance of pre-emption rights by minority partners and other customary closing conditions are required to complete the acquisition.
Anglo American has also agreed to sell Dawson Mine in central Queensland to PT Bukit Makmur Mandiri Utama in a subsequent deal for $455m.
Earlier this month, Anglo American agreed to sell its 33.3% stake in Jellinbah Group, a joint venture that owns 70% of the Jellinbah East and Lake Vermont steelmaking coal mines in Australia, to Zashvin for A$1.6bn ($1.1bn).
