LONDON – 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 US$3.88 billion (more than N$63 billion), after a previous deal collapsed. 

The company plans to use the cash proceeds from the sale to reduce debt ahead of its multi-billion 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 said. 

US group Peabody Energy walked away from aUS$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 the event as a material adverse change that required it to exit the agreements. 

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 yesterday 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 US$2.3 billion in cash upfront and up to US$1.58 billion linked to coal prices, the company said. 

The exit from steelmaking coal came as Anglo American shifted its focus to its higher-value businesses, such as copper and iron, while fending off a takeover bid from mining rival BHP. 

– Nampa/AFP