Peabody Energy has announced that it has terminated agreements to purchase Anglo American’s steelmaking coal assets in Queensland almost five months after an ignition event took the Moranbah North mine out of action.
The move sees Anglo American planning to launch arbitration to seek damages for wrongful termination, according to chief executive officer Duncan Wanblad.
Mr Wanblad also pointed to unsolicited interest received for the assets in recent months, saying; “we are confident that we will successfully conclude an alternative sales process for value in due course.”
The $5 billion-plus acquisition deal announced in November last year would have seen Peabody add the Moranbah North, Grosvenor, Aquila, and Capcoal operations in the Bowen Basin to its portfolio.
Indonesia’s PT Bukit Makmur Mandiri Utama (BUMA) had agreed to acquire a majority interest in Anglo’s Dawson mine from Peabody for a total consideration of almost $700 million in a back-to-back transaction. Peabody has also terminated that agreement.
With no definitive timeline to resuming sustainable longwall production at Moranbah North, Peabody is citing a material adverse change (MAC) as defined under the purchase agreements.
“The two companies did not reach a revised agreement to cure the MAC that compensated Peabody for the material and long-term impacts of the MAC on the most significant mine in the planned acquisition,” Peabody president and chief executive officer Jim Grech said.
“Peabody has chosen to terminate the transaction and will continue to execute our plans to create substantial value from our diversified global asset portfolio.”
Prior to the March 31 ignition event, the acquisition had been scheduled to close in April 2025.
Peabody said Moranbah North was previously forecast to produce 5.3 million tons of saleable production in 2025, yet there was no timetable for the resumption of longwall production at forecasted volumes and costs.
Mr Wanblad said Anglo American was confident in its belief that the event at Moranbah North in March did not constitute a MAC under the sale agreements with Peabody.
“Our view is supported by the lack of damage to the mine and equipment, as well as the substantial progress made with the regulator, our employees and the unions, and other stakeholders as part of the regulatory process towards a safe restart of the mine,” he said.
“In fact, just in the last week we achieved a further important milestone, with our workforce signing off the risk assessment that underpins the restart strategy. We are therefore very disappointed that Peabody has decided not to complete the transaction.
“Despite our strongly held view, we believe that it would have been better for all parties to avoid a legal dispute. On that basis we have invested significant effort and shown great flexibility over recent months to find a solution for Peabody, including proposing amended terms and technical options.
“Following Peabody’s decision not to proceed with the transaction, we continue to focus on the safe restart of Moranbah North and in delivering value from the entirety of our SMC portfolio. We continue to reserve our rights under the definitive agreements, we are confident in our legal position and will shortly initiate an arbitration to seek damages for wrongful termination.”