AngloAmerican Steelmaking coal Photo by ABC News
London, United Kingdom: Mining group Anglo American said Monday that it had agreed to sell its Australian coal mines for steelmaking to the UK group Dhilmar for up to $3.88 billion, after a previous deal collapsed.
The company plans to use the cash proceeds from the sale to reduce debt ahead of its multibillion-dollar merger with Canadian peer Teck Resources.
"This agreement represents another major step in the simplification of our portfolio ahead of completing our merger with Teck," said Anglo American's chief executive Duncan Wanblad.
"Through this transaction, we will complete our exit from steelmaking coal," he added.
US group Peabody Energy walked away from a $3.8 billion deal last year to buy Anglo American's steelmaking coal business.
Peabody terminated the purchase agreements following a fire at the deal's flagship mine, citing it as a material adverse change that required it to exit the accord.
The Moranbah North Mine in Australia has been closed since the fire at the end of March, and the two companies have failed to agree on compensation for the incident.
Anglo American said Monday that it continued to pursue arbitration to seek damages for wrongful termination of the contract, as it did not consider a material adverse change to have taken place.
The deal with Dhilmar, which is registered in Britain, includes $2.3 billion in cash upfront and up to $1.58 billion linked to coal prices, the company said.
The exit from steelmaking coal comes as Anglo American shifted its focus to its higher-value businesses like copper and iron, as it fended off a takeover bid from mining rival BHP.
