Anglo American offloads Australian coal business ahead of Teck merger
Anglo American will sell its Australian steelmaking coal business for up to $3.88billion as it exits the sector ahead of its merger with Canada’s Teck Resources.
The FTSE 100 miner said it would sell the mines in Queensland to UK-based miner Dhilmar, as part of its plan to spin off its non-core assets and slash debt.
The sale is the latest move by Anglo American to shift its focus towards copper and iron ore production, amid a restructure and simplification of the business following a hostile takeover by BHP last year.
The sale of Anglo’s Australian coal business follows the sale of its nickel unit and attempts to sell its diamond business DeBeers, ahead of its $53billion merger with Teck Resources.
Chief executive Duncan Wanblad said the transaction would ‘complete our exit from steelmaking coal’.
Dhilmar will pay $2.3billion in upfront cash and up to $1.58billion linked to coal prices, with the proceeds reserved to cut debt, Anglo American said.
The deal to sell its coal assets to Dhilmar comes ahead of Anglo’s merger with Teck
London-listed Shares in Anglo American fell 1.36 per cent to 3,781p.
Last year, US company Peabody Energy withdrew its $3.78billion bid for Anglo American’s Australian coal assets, after the two companies failed to agree on a lower price following an explosion at one of Anglo’s mines.
In its update to investors this morning, the miner said it continued to pursue arbitration against Peabody over the collapsed deal.
‘This agreement represents another major step in the simplification of our portfolio ahead of completing our merger with Teck,’ said Wanblad.
‘Through this transaction, we will complete our exit from steelmaking coal, delivering aggregate cash proceeds of up to $4.9 billion, given the prior completion of the sale of our interest in the Jellinbah mine for approximately $1billion.’
Last December, Anglo American shareholders voted in favour of its planned merger with Teck, which will create one of the world’s largest copper producers..
Anglo American will have a stake of around 62.4 per cent in the combined group, which will become Anglo Teck, while Canada’s Teck will hold 37.6 per cent.
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