Peabody plans to refinance the loan before the acquisition closes next year. Credit: RozenskiP/Shutterstock.

Peabody Energy has secured a $2.08bn bridge loan to facilitate the acquisition of Anglo American‘s steelmaking coal business, Bloomberg reported.

The loan, arranged with a consortium of banks and private credit lenders, is set to be refinanced before the deal’s expected closure in the first half of next year. This strategic move was detailed in a recent public filing by the company.

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The financing for this significant acquisition, announced earlier this week, comes from Jefferies, Deutsche Bank, KKR Capital Markets and KKR Corporate Lending, as stated in the company’s announcement.

Private credit is increasingly becoming a viable option for funding in the mining sector, especially as traditional lenders grow cautious of environmental, social and governance risks associated with certain projects.

This trend is exemplified by Australian coal miner Whitehaven Coal, which earlier this year obtained a $1.1bn (A$1.7bn) loan from a group of 17 private credit providers and one bank.

This loan was for the acquisition of two mines from BHP Group, highlighting a shift in the financing landscape of the mining industry.

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Peabody’s agreement to purchase Anglo American’s coal operations in Queensland, Australia, marks its expansion into metallurgical coal production, a key component in steel manufacturing.

In a parallel transaction, Peabody has also arranged to sell a controlling stake in one of these mines to PT Delta Dunia Makmur of Indonesia for $455m.

Anglo American’s divestment of its coal business is part of its broader restructuring strategy.

This strategy was initiated in response to a $49bn takeover bid from BHP Group earlier in the year, indicating a reshaping of the global mining sector landscape.