Peabody Energy, a leading coal producer, formally notified Anglo American that it believes a material adverse change (MAC) has occurred, potentially jeopardising its planned acquisition of Anglo’s Australian steelmaking coal assets.
The transaction was expected to close mid-2025, subject to customary closing conditions.
The dispute centres on the shutdown of the Moranbah North Mine, which has been inactive since a gas ignition incident on March 31, 2025.
Peabody president and chief executive Jim Grech said that although the company remained on track to complete the steelmaking coal acquisition from Anglo, the issues at Moranbah North had created significant uncertainty around the transaction.
“A substantial share of the acquisition value was associated with Moranbah North, yet there is no known timetable for resuming longwall production,” he said.
Anglo responded to Peabody, insisting that a temporary production halt at its Moranbah North mine does not jeopardise the transaction.
Following the safety incident, operations partially resumed on 19 April after regulatory inspections, but full longwall production remains suspended pending further safety approvals.
Anglo said it is working closely with Resources Safety & Health Queensland (RSHQ) and industry experts to ensure a structured restart.
Grech said if the MAC is not resolved to their satisfaction in the limited timeframe specified under the companies' acquisition agreements, Peabody may elect to terminate the agreements.
Deal still on track
However, Anglo said that the stoppage at Moranbah North does not meet the threshold for a MAC under the sale agreement, meaning Peabody cannot walk away solely due to the disruption.
Anglo also said it expects to resolve any concerns and meet remaining conditions for completion.
“Anglo American expects to continue working with Peabody towards addressing its concerns and satisfying the remaining customary conditions in those agreements that are required for completion of the transaction,” it said.
It is not far-fetched to conclude that the New York-listed company is seeking leverage in final negotiations, but the fundamental terms appear intact.
Unless new risks emerge, the deal is expected to close once regulators sign off.
The deal, announced on 25 November 2024, would see Peabody acquire Anglo’s entire steelmaking coal portfolio in Australia.
This includes four metallurgical coal mines – Moranbah North, Grosvenor, Aquila, and Capcoal – located in Australia's Bowen Basin, which is widely recognised for the world's highest-quality steelmaking coal.
About 80% of the mines' output is hard coking coal.
The mines are complementary to Peabody's existing Australian platform, including Centurion Mine, and are expected to produce approximately 11.3 million tons of primarily hard coking coal in 2026.
The targeted mines have an average mine life greater than 20 years with 306 million tonnes of marketable reserves and an additional 1.7 billion tonnes of coal resources.
Peabody had agreed to pay cash of $2,3 billion, comprising of cash of about $1,7 billion at closing and deferred payments of $625 million payable in four annual installments commencing on the first anniversary of the completion date.
The coal miner also agreed at the time to further contingent payments of up to $1 billion, subject to potential favourable future events.
Proceeds to Anglo American would also include $455 million made possible by the acquisition of Dawson Mine by PT Bukit Makmur Mandiri Utama in a back-to-back transaction.
Mathew Nyaungwa, Editor-In-Chief, Rough & Polished
