Anglo American PLC (LSE:AAL), one of the world's largest mining companies, is poised to begin a massive restructuring with the divestment of its metallurgical coal (met coal) assets following a rebuffed £39 billion bid approach from rival BHP Ltd.
According to a detailed analysis by Jefferies, this move is stage one in a process that will also see the disposal of Anglo American Platinum (Amplats) and De Beers.
Anglo American is currently the third-largest supplier in the seaborne met coal market, with significant operations in Queensland's Bowen Basin, Australia.
Its met coal portfolio includes the Moranbah North and Grosvenor mines (both 88%-owned), the Capcoal complex (70%-owned), the Dawson Complex (51%-owned), and a 23.3% stake in the Jellinbah mine.
Notably, the Moranbah North and Grosvenor mines are considered the 'crown jewels' of this portfolio, producing premium hard coking coal essential for steelmaking. Additionally, Anglo owns the inactive Peace River Coal partnership in British Columbia, Canada.
Valuations
Jefferies values Anglo's coal business between US$3.3 billion (based on 2024 estimated earnings before interest, taxes, depreciation, and amortisation (EBITDA)) and US$5.7 billion (based on 2025 estimated EBITDA).
The estimated net present value (NPV) of Anglo's coal assets stands at approximately US$4.4 billion. A sale price around the upper half of this range is considered feasible, reflecting the high quality of the assets and the operational upside as production volumes ramp up and mining cost inflation eases.
The restructuring effort is expected to start with the sale of the met coal assets due to the relatively low geopolitical complexity compared with other divisions such as Amplats and De Beers. This strategic sequencing is aimed at minimising value leakage and capitalising on the high valuation potential of the coal assets.
Interested parties
Several potential buyers have been identified by Jefferies for Anglo's met coal assets. These include major industry players such as BHP, which could benefit from synergies with its existing operations in the Bowen Basin, and Glencore, which might consider these assets post the EVR transaction closure.
Additionally, Peabody Energy, an American coal miner with operations in Queensland, is also seen as a potential acquirer, particularly given its strong financial position and interest in met coal assets, the American bank said in a research note.
In the mix too, according to Jefferies, are Australian operators, financial buyers, and Japanese and Indian steel consortia, which may find assets such as Dawson, Capcoal, and Jellinbah attractive due to their size, coal quality, and operational life.
The divestment of coal assets is anticipated to provide a short-term boost to Anglo American’s share price.
However, it would also mark the beginning of a more challenging phase in the company’s broader restructuring plan.
The subsequent steps, involving the potential demerger or sale of De Beers and Amplats, are expected to be more complex, with significant risks associated with valuation and shareholder impact, Jefferies said in its comprehensive analysis of Anglo.