Anglo American PLC (LSE:AAL) has agreed to sell its Australian coking coal business for up to US$3.875 billion (£2.9 billion) in cash as the miner continues to simplify its portfolio ahead of its planned merger with Canada's Teck.
The FTSE 100 miner had previously struck a deal to sell these steelmaking coal assets to Peabody Energy in 2024, but the US company walked away after an explosion at one of the mines.
The sale to privately held UK company Dhilmar Ltd includes an upfront cash payment of US$2.3 billion on completion and a price-linked earnout worth up to US$1.575 billion over five years.
The earnout will be linked to coal prices and calculated quarterly. Anglo said the payments would amount to 50% of incremental revenue after royalties from coal production above agreed benchmark prices. Trigger prices for the earnout broadly align with premium low-volatility hard coking coal benchmark prices of US$259 a tonne, adjusted annually for US inflation from completion.
Anglo said the proceeds would be used to reduce net debt.
Chief executive Duncan Wanblad said: “This agreement represents another major step in the simplification of our portfolio ahead of completing our merger with Teck.”
He added that the deal will complete Anglo's exit from steelmaking coal.
Completion is expected by the first quarter of 2027, subject to regulatory approvals, competition clearances and pre-emption arrangements.
Anglo said it continues to pursue arbitration proceedings against Peabody following the US group's withdrawal from a November 2024 agreement to acquire the same coal assets.
The company said it remained confident that the explosion at the Moranbah North mine cited by Peabody did not amount to a material adverse change.