Anglo American Shares Fall as US Firm Peabody Energy Exits $3.8 Billion Coal Deal
Shares in Anglo American, a leading mining group, dipped around 2% on London’s FTSE 100 index on Wednesday, following the withdrawal of US firm Peabody Energy from a $3.8 billion deal to purchase Anglo’s steelmaking coal business. The deal’s collapse marks a significant setback for Anglo American, which had been seeking to exit the steelmaking coal sector and focus on its higher-value businesses.
According to reports, Peabody Energy terminated the purchase agreements on Tuesday, citing a material adverse change (MAC) – a reason to exit the deal – following a fire at the Moranbah North Mine in Australia, which has been closed since the end of March. Anglo American and Peabody Energy failed to agree on compensation for the incident, leading to the collapse of the deal.
However, Anglo American has disputed Peabody’s claim of a MAC, citing the lack of damage to the mine and equipment, as well as the progress made towards a safe restart of the mine. “Our view is supported by the substantial progress made… towards a safe restart of the mine,” said Anglo American Chief Executive Duncan Wanblad in a statement. The company has announced its intention to begin arbitration to seek damages for wrongful termination of the contract.
The failed deal would have marked Anglo American’s exit from the steelmaking coal business, a move that reflects the company’s shift towards higher-value businesses, such as copper and iron. This strategic shift follows Anglo American’s rejection of a $49 billion takeover offer from mining rival BHP.
The developments also come as countries move away from highly polluting coal production to meet net-zero carbon emissions targets. A deal struck at the COP29 climate summit, where countries agreed not to build new unabated coal-power plants, further underscores the global shift towards cleaner energy sources.
While the collapse of the deal may represent a short-term setback for Anglo American, the company’s strategic focus on higher-value businesses positions it for long-term growth and sustainability in the rapidly evolving mining industry. As global energy demands continue to shift towards cleaner sources, Anglo American’s commitment to adapting to these changes will likely remain a key factor in its future success.
