Peabody Energy will no longer acquire Anglo American’s steelmaking coal business in Queensland for up to $US3.775 billion ($5.8 billion).
Peabody cited a fire incident at Anglo’s Moranbah North underground coal mine that took place on March 31 as part of the reason behind the agreement’s termination.
The incident saw high levels of carbon monoxide detected at the Moranbah North site, but an Anglo representative confirmed shortly after that no injuries were recorded.
“The underground environment is under continuous monitoring and this indicates a stable atmosphere,” an Anglo spokesperson said at the time.
“All personnel are safe. The health and safety of our people is paramount and an orderly evacuation to the surface was safely completed, according to our action response plan.”
A week later, both Anglo and Peabody pledged to work together to understand the impacts of the fire.
Now, Peabody has said “the exact cause of the event remains unknown, with no definitive timeline to resuming sustainable longwall production”.
“The two companies did not reach a revised agreement to cure the MAC (material adverse change) that compensated Peabody for the material and long-term impacts of the MAC on the most significant mine in the planned acquisition,” Peabody president and chief executive officer (CEO) Jim Grech said.
“Peabody has chosen to terminate the transaction and will continue to execute our plans to create substantial value from our diversified global asset portfolio.”
Peabody has also elected to terminate its agreement with Delta Dunia Group – which was initially made through its indirect subsidiary PT Bukit Makmur Internasional (BUMA International) – to acquire a 51 per cent stake in the Dawson Complex, which comprises the Dawson, Dawson South, Dawson South Exploration, and Theodore South joint ventures.
“Peabody’s portfolio is very well positioned, with growing exposure to seaborne metallurgical coal highlighted by our new 25-year premium hard coking coal Centurion mine, a low-cost seaborne thermal coal platform, and a leading US thermal coal position capitalising on rising power generation demand,” Grech said.
“Moving forward, we intend to execute a four-pronged strategy for value creation.”
In response to Peabody’s announcement, Anglo has reaffirmed its focus towards a safe restart of Moranbah North and will evaluate legal options.
“We are confident in our belief that the event at Moranbah North in March does not constitute a MAC under the sale agreements with Peabody,” Anglo CEO Duncan Wanblad said.
“Our view is supported by the lack of damage to the mine and equipment, as well as the substantial progress made with the regulator, our employees and the unions, and other stakeholders as part of the regulatory process towards a safe restart of the mine.”
Wanblad said its Moranbah North workforce signed the risk assessment underpinning the mine’s restart strategy last week, and Anglo has invested “significant effort and shown great flexibility over recent months to find a solution for Peabody”.
“We are therefore very disappointed that Peabody has decided not to complete the transaction,” he said.
“We held a very competitive process to sell this high-quality parcel of steelmaking coal assets in 2024 and the unsolicited inbound interest expressed to us in recent months is testament to the strategic value of these assets and the attractive long-term market fundamentals.
“We are confident that we will successfully conclude an alternative sales process for value in due course.”