REG - Anglo American PLC - Anglo American to sell steelmaking coal business

Anglo AmericanAnnouncement

25/11/2024 07:00

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RNS Number : 4847N  Anglo American PLC  25 November 2024

 25 November 2024
 Anglo American to generate up to US$4.9 billion of total cash proceeds from
 sale of steelmaking coal business: agrees sale of remaining steelmaking coal
 portfolio to Peabody Energy for up to US$3.8 billion

Anglo American announces that it has now entered into definitive agreements to
sell the entirety of its steelmaking coal business, to generate up to US$4.9
billion in aggregate gross cash proceeds(1), including the already announced
sale of Anglo American's interest in Jellinbah for approximately US$1.1
billion.

 

Announced today, Anglo American has agreed to sell its portfolio of
steelmaking coal mines that it operates in Australia ("Steelmaking Coal
Portfolio") to Peabody Energy ("Peabody") for a cash consideration of up to
US$3.775 billion ("the Transaction").

 

Peabody's agreed cash consideration of up to US$3.775 billion comprises an
upfront cash consideration of US$2.05 billion at completion; deferred cash
consideration(2) of US$725 million; the potential for up to US$550 million in
a price-linked earnout(3); and contingent cash consideration(4) of US$450
million linked to the reopening of the Grosvenor mine.

 

Duncan Wanblad, Chief Executive of Anglo American, said "The sale of our
steelmaking coal business is another important step towards delivering the
strategy that we set out in May to create a world class copper, premium iron
ore and crop nutrients business. Through focus, asset quality and outstanding
growth options, Anglo American will offer a highly differentiated investment
proposition supported by strong cash generation and the capabilities and
longstanding relationship networks that can deliver our full potential. We are
absolutely focused on delivering that strategy and unlocking the associated
value as we streamline our cost structures and create a much simpler, more
resilient and more agile business that will enable full market value
recognition.

 

"All the transactions to deliver our portfolio transformation are well in
train - the demerger of Anglo American Platinum is expected by mid-2025 and we
have seen strong interest in our nickel business with the sale process well
progressed. We expect De Beers to follow, recognising its unmatched industry
and brand position and good progress in working with stakeholders to position
the business for long term success as we work toward separation for value. We
are well progressed with the delivery of $1 billion of cost savings and have
detailed plans in place to deliver at least an additional US$800 million in
pre-tax recurring cost benefits on a run-rate basis from the end of 2025 as we
progress the portfolio transformation.

 

"In steelmaking coal, through a combination of today's announced Transaction
and our previously announced agreement to sell our interest in Jellinbah, we
stand to unlock up to US$4.9 billion of value, reflecting the high quality of
the assets and adding to our balance sheet resilience. Peabody is a
long-established and respected operator and we will work together and with our
workforce, local communities, government, customers and partners to ensure a
successful transition."

 

Jim Grech, President and Chief Executive Officer of Peabody, commented: "We're
pleased to acquire these world-class assets from Anglo American, a company
that shares our strong values of safety, sustainability and social license to
operate. We look forward to integrating these assets, teaming up with their
highly skilled workforce, and aligning with our new mine joint venture
partners to create long-term value."

 

The Steelmaking Coal Portfolio consists primarily of an 88.0% interest in the
Moranbah North joint venture; a 70% interest in the Capcoal joint venture; an
86.36% interest in the Roper Creek joint venture; a 51.0% interest in the
Dawson joint venture, Dawson South joint venture, Dawson South Exploration
joint venture and the Theodore South joint venture; and a 50.0% interest in
the Moranbah South joint venture.

 

The Transaction is subject to a number of conditions, including customary
competition and regulatory clearances, and pre-emption arrangements. The
upfront cash consideration is subject to normal completion adjustments and
completion is expected by the third quarter of 2025. Peabody has agreed to pay
a US$75 million deposit on signing which Anglo American is entitled to retain
if the sale is terminated in certain limited circumstances.

 

Footnotes:

 

(1)   Total non-contingent net proceeds from the sale of the Jellinbah
interest and this Transaction are estimated to be approximately US$3.6
billion.

(2) The deferred cash consideration will be paid in four instalments occurring
annually from the first anniversary of the transaction completion date, as
follows: payment 1: US$111.2 million; payment 2: US$225.8 million; payment 3:
US$225.8 million; payment 4: US$162.2 million.

(3) The price-linked earnout comprises uncapped quarterly payments of up to
US$550 million in aggregate, applicable for five years starting from the first
day of the quarter following the transaction completion date. The quarterly
payment will be calculated as 35% of incremental revenue from equity coal
production (excluding Dawson) above agreed metallurgical and thermal coal
prices. The precise trigger prices above which payments are made differ by
product, but broadly align to PLV HCC Benchmark prices of: Year 1 US$240/t;
Year 2 US$235/t; Year 3 US$240/t; Year 4 US$246/t; Year 5 US$252/t.

(4) The contingent cash consideration comprises a US$250 million payment due
one month after the reopening of the Grosvenor mine, defined as the earlier of
i) first sale of coal from longwall coal production from the Grosvenor mine;
or ii) 1.5 Mt of cumulative run-of-mine coal production from the Grosvenor
mine, and a US$200 million payment on the second anniversary of the reopening
of the Grosvenor mine.

 

 

For further information, please contact:

 

 Media                                                                              Investors

 UK                                                                                 UK

 James Wyatt-Tilby                                                                  Tyler Broda

 james.wyatt-tilby@angloamerican.com                                                tyler.broda@angloamerican.com
 (mailto:james.wyatt-tilby@angloamerican.com)

                                                                                  Tel: +44 (0)20 7968 1470
 Tel: +44 (0)20 7968 8759

                                                                                  Michelle West-Russell
 Marcelo Esquivel

                                                                                  michelle.west-russell@angloamerican.com
 marcelo.esquivel@angloamerican.com (mailto:marcelo.esquivel@angloamerican.com)     (mailto:michelle.west-russell@angloamerican.com)

 Tel: +44 (0)20 7968 8891                                                           Tel: +44 (0)20 7968 1494

 Rebecca Meeson-Frizelle                                                            Asanda Malimba

 rebecca.meeson-frizelle@angloamerican.com                                          asanda.malimba@angloamerican.com
 (mailto:rebecca.meeson-frizelle@angloamerican.com)

                                                                                  Tel: +44 (0)20 7968 8480
 Tel: + 44 (0)20 7968 1374

 South Africa

 Nevashnee Naicker

 nevashnee.naicker@angloamerican.com

 Tel: +27 (0)11 638 3189

 

Notes:

Anglo American is a leading global mining company focused on the responsible
production of copper, premium iron ore and crop nutrients - future-enabling
products that are essential for decarbonising the global economy, improving
living standards, and food security. Our portfolio of world-class operations
and outstanding resource endowments offers value-accretive growth potential
across all three businesses, positioning us to deliver into structurally
attractive major demand growth trends.

 

Our integrated approach to sustainability and innovation drives our
decision-making across the value chain, from how we discover new resources to
how we mine, process, move and market our products to our customers - safely,
efficiently and responsibly. Our Sustainable Mining Plan commits us to a
series of stretching goals over different time horizons to ensure we
contribute to a healthy environment, create thriving communities and build
trust as a corporate leader. We work together with our business partners and
diverse stakeholders to unlock enduring value from precious natural resources
for our shareholders, for the benefit of the communities and countries in
which we operate, and for society as a whole. Anglo American is re-imagining
mining to improve people's lives.

 

Anglo American is currently implementing a number of major structural changes
to unlock the inherent value in its portfolio and thereby accelerate delivery
of its strategic priorities of operational excellence, portfolio
simplification, and growth. This portfolio transformation will focus Anglo
American on its world-class resource asset base in copper, premium iron ore
and crop nutrients, once the sale of our steelmaking coal and nickel
businesses, the demerger of our PGMs business (Anglo American Platinum), and
the separation of our iconic diamond business (De Beers) have been completed.

 

www.angloamerican.com (http://www.angloamerican.com)

 

 

 

 

Group terminology

In this document, references to "Anglo American", the "Anglo American Group",
the "Group", "we", "us", and "our" are to refer to either Anglo American plc
and its subsidiaries and/or those who work for them generally, or where it is
not necessary to refer to a particular entity, entities or persons. The use of
those generic terms herein is for convenience only, and is in no way
indicative of how the Anglo American Group or any entity within it is
structured, managed or controlled. Anglo American subsidiaries, and their
management, are responsible for their own day-to-day operations, including but
not limited to securing and maintaining all relevant licences and permits,
operational adaptation and implementation of Group policies, management,
training and any applicable local grievance mechanisms. Anglo American
produces group-wide policies and procedures to ensure best uniform practices
and standardisation across the Anglo American Group but is not responsible for
the day to day implementation of such policies. Such policies and procedures
constitute prescribed minimum standards only. Group operating subsidiaries are
responsible for adapting those policies and procedures to reflect local
conditions where appropriate, and for implementation, oversight and monitoring
within their specific businesses.

 

Disclaimer

This document is for information purposes only and does not constitute, nor is
to be construed as, an offer to sell or the recommendation, solicitation,
inducement or offer to buy, subscribe for or sell shares in Anglo American or
any other securities by Anglo American or any other party. Further, it should
not be treated as giving investment, legal, accounting, regulatory, taxation
or other advice and has no regard to the specific investment or other
objectives, financial situation or particular needs of any recipient.

 

Forward-looking statements and third party information

This document includes forward-looking statements. All statements other than
statements of historical facts included in this document, including, without
limitation, those regarding Anglo American's financial position, business,
acquisition and divestment strategy, dividend policy, plans and objectives of
management for future operations, prospects and projects (including
development plans and objectives relating to Anglo American's products,
production forecasts and Ore Reserve and Mineral Resource positions) and
sustainability performance related (including environmental, social and
governance) goals, ambitions, targets, visions, milestones and aspirations,
are forward-looking statements. By their nature, such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of Anglo
American or industry results to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.

 

Such forward-looking statements are based on numerous assumptions regarding
Anglo American's present and future business strategies and the environment in
which Anglo American will operate in the future. Important factors that could
cause Anglo American's actual results, performance or achievements to differ
materially from those in the forward-looking statements include, among others,
levels of actual production during any period, levels of global demand and
commodity market prices, unanticipated downturns in business relationships
with customers or their purchases from Anglo American, mineral resource
exploration and project development capabilities and delivery, recovery rates
and other operational capabilities, safety, health or environmental incidents,
the effects of global pandemics and outbreaks of infectious diseases, the
impact of attacks from third parties on our information systems, natural
catastrophes or adverse geological conditions, climate change and extreme
weather events, the outcome of litigation or regulatory proceedings, the
availability of mining and processing equipment, the ability to obtain key
inputs in a timely manner, the ability to produce and transport products
profitably, the availability of necessary infrastructure (including
transportation) services, the development, efficacy and adoption of new or
competing technology, challenges in realising resource estimates or
discovering new economic mineralisation, the impact of foreign currency
exchange rates on market prices and operating costs, the availability of
sufficient credit, liquidity and counterparty risks, the effects of inflation,
terrorism, war, conflict, political or civil unrest, uncertainty, tensions and
disputes and economic and financial conditions around the world, evolving
societal and stakeholder requirements and expectations, shortages of skilled
employees, unexpected difficulties relating to acquisitions or divestitures,
competitive pressures and the actions of competitors, activities by courts,
regulators and governmental authorities such as in relation to permitting or
forcing closure of mines and ceasing of operations or maintenance of Anglo
American's assets and changes in taxation or safety, health, environmental or
other types of regulation in the countries where Anglo American operates,
conflicts over land and resource ownership rights and such other risk factors
identified in Anglo American's most recent Annual Report. Forward-looking
statements should, therefore, be construed in light of such risk factors and
undue reliance should not be placed on forward-looking statements. These
forward-looking statements speak only as of the date of this document. Anglo
American expressly disclaims any obligation or undertaking (except as required
by applicable law, the City Code on Takeovers and Mergers, the UK Listing
Rules, the Disclosure and Transparency Rules of the Financial Conduct
Authority, the Listings Requirements of the securities exchange of the JSE
Limited in South Africa, the SIX Swiss Exchange, the Botswana Stock Exchange
and the Namibian Stock Exchange and any other applicable regulations) to
release publicly any updates or revisions to any forward-looking statement
contained herein to reflect any change in Anglo American's expectations with
regard thereto or any change in events, conditions or circumstances on which
any such statement is based.

 

Nothing in this document should be interpreted to mean that future earnings
per share of Anglo American will necessarily match or exceed its historical
published earnings per share. Certain statistical and other information
included in this document is sourced from third party sources (including, but
not limited to, externally conducted studies and trials). As such it has not
been independently verified and presents the views of those third parties, but
may not necessarily correspond to the views held by Anglo American and Anglo
American expressly disclaims any responsibility for, or liability in respect
of, such information.

©Anglo American Services (UK) Ltd 2024.  (TM) and (TM) are trademarks of
Anglo American Services (UK) Ltd.

 

 

Legal Entity Identifier: 549300S9XF92D1X8ME43

 

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