KEY HIGHLIGHTS:
Anglo American is anticipated to separate its Amplats division by mid-2025.
The sale occurs shortly before the expiration of a six-month moratorium on BHP’s acquisition attempts.
Anglo American’s stock has increased by 2.4%.
London/ Melbourne- On November 25, 2024, Anglo American announced its agreement to sell its remaining Australian steelmaking coal mines to Peabody Energy for a total consideration of up to $3.78 billion in cash. This transaction marks the initial significant divestiture in a broader restructuring initiative.
The London-based mining company is realigning its operations to concentrate on copper production, following its successful defense against a $49 billion takeover proposal from its larger competitor, BHP, in May. The company is relying on asset disposals to enhance its value and deter potential acquirers.
As of 08:29 GMT, Anglo American’s share price had risen by 2.4%.
The agreement with Peabody includes an immediate payment of $2.05 billion upon completion, along with deferred cash payments totaling $725 million and a potential additional $550 million. Furthermore, there is a contingent cash payment of $450 million associated with the reopening of the Grosvenor mine, which experienced a fire in June, as stated by Anglo American.
Ben Cleary, a portfolio manager at Tribeca Investment Partners, which holds a significant stake in Anglo, remarked that the company secured a favorable price for the transaction. He noted, “A substantial amount of cash and the deferred component appears prudent.”
Peabody will acquire the Moranbah North, Grosvenor, Aquila, and Capcoal mines situated in Australia’s Bowen Basin. Additionally, Anglo’s Dawson mine will be sold for $455 million to a subsidiary of Indonesia’s Delta Dunia Group, which operates the BUMA coal mining services.
This agreement is timely, occurring just days before the expiration of a six-month freeze on BHP’s acquisition attempts, as mandated by UK takeover regulations, after Anglo had previously rejected BHP’s overtures on three occasions.
Anglo has also divested a minority interest in a joint venture that controls the Jellinbah East and Lake Vermont steelmaking coal mines in Australia for $1.1 billion.
RESTRUCTURING STRATEGY:
Anglo American’s restructuring strategy encompasses the divestiture of underperforming assets in platinum, nickel, and diamonds, with a renewed focus on copper—an essential metal for the transition to clean energy and the rapid growth of artificial intelligence, iron ore, and agricultural nutrients.
Marina Calero, an analyst at RBC Capital Markets, stated, “We foresee the potential for a significant revaluation in the medium term as Anglo implements its restructuring plan, resulting in a streamlined portfolio with a 60% focus on copper.”
She also indicated that a renewed bid from BHP remains a possibility, given the approaching end of November deadline.
Following the coal divestiture, Anglo is expected to separate its Anglo American Platinum unit in South Africa by mid-2025. CEO Duncan Wanblad has also indicated that the diamond conglomerate De Beers is likely to follow suit as the company progresses towards the separation of that business.
“We are making significant progress towards achieving $1 billion in cost savings,” he stated in a press release.
(Reporting by Melanie Burton in Melbourne, Clara Denina in London and Aby Jose Koilparambil in Bengaluru; Editing by Sonali Paul, Rashmi Aich, Louise Heavens and Emelia Sithole-Matarise)
Source
https://www.cnbcafrica.com/