Duncan Wanblad’s Anglo American faces hurdle in $3.5 billion deal

Key Points

• Anglo American’s $3.5 billion coal asset sale to Peabody Energy faces delays due to a fire at Moranbah North Mine, casting doubt on deal completion.
• The coal sale is part of Anglo American’s broader strategy to simplify its portfolio, including plans to spin off its platinum unit and list De Beers.
• Anglo American’s restructuring, amid a profit decline, includes job cuts and efforts to streamline operations, as the Peabody deal’s outcome remains uncertain.

Anglo American, the mining giant led by South African businessman Duncan Wanblad, is facing a significant challenge in its $3.5 billion sale of steelmaking coal assets to Peabody Energy Corp.

The deal, first announced in November 2024, now faces new hurdles following a disruptive fire at the Moranbah North Mine in Queensland, Australia, which has stalled operations and raised doubts about the completion of the transaction.

This disruption comes at a time when Anglo American is also undergoing a broader strategic overhaul, including the potential listing of its diamond business, De Beers. The coal asset sale was intended to simplify the company’s portfolio, which also includes plans to sell nickel mines and spin off its platinum unit.

Peabody moves ahead with Anglo deal

Peabody had agreed to pay Anglo $2.05 billion in cash upfront, with additional payments tied to factors like coal prices and the reopening of the Grosvenor mine, which had been shut down after a deadly explosion and fire in June. A company spokesperson confirmed that Anglo is working closely with Peabody to finalize the deal, despite the mine’s ongoing suspension.

The acquisition was expected to boost Peabody’s position in the global seaborne steelmaking coal market. However, with demand for the fuel set to decline through 2027, according to the International Energy Agency (IEA), Peabody had planned to shift its focus toward metallurgical coal. This move aligns with Anglo’s strategy to focus on its core commodities, following the rejection of a $49 billion takeover offer from BHP Group earlier this year.

The fire at the Moranbah North Mine could trigger a “material adverse change” clause, potentially allowing Peabody to walk away from the deal or renegotiate its terms. Analysts at Jefferies, led by Christopher LaFemina, suggest that Peabody may consider backing out, given the increased risks and the current valuation of the deal.

Anglo American restructures amid profit decline

Founded in 1917, Anglo American has grown into a diversified mining powerhouse with operations spanning platinum, diamonds, copper, nickel, iron ore, polyhalite, and steelmaking coal. Since Wanblad took over as CEO in April 2022, the focus has been on improving profitability through restructuring, streamlining operations, and selling non-core assets.

In line with this strategy, Anglo American is preparing to cut more jobs across its corporate offices in Johannesburg and London, signaling further steps in its ongoing restructuring efforts. The company’s financial performance has been under pressure, with revenue dropping from $30.7 billion in 2023 to $27.3 billion in 2024. Its underlying EBITDA also saw a decline, falling from $10 billion in 2023 to $8.5 billion in 2024.

As Anglo American navigates these challenges, the outcome of the Peabody deal will play a crucial role in shaping the company’s future direction and realizing Wanblad’s strategic vision for the mining giant.