May 18 - Anglo American said on Monday it will sell its Australian steelmaking coal mines to UK-based miner Dhilmar for up to $3.88 billion, a move that completes the companys exit from that segment and simplifies the business ahead of a planned merger with Canadas Teck Resources.
The assets being sold are located in Queenslands Bowen Basin, which is described in company statements as the globe's leading steelmaking coal region. The package comprises $2.3 billion in upfront cash plus up to $1.58 billion of additional payments linked to future coal prices.
Anglo said the proceeds from the transaction will be used to reduce its debt burden as part of a broader strategy to divest or spin off non-core operations while progressing the proposed combination with Teck Resources that the companies say will create a copper-focused heavyweight.
Market reaction was immediate: Anglos shares dropped 1.7%, a move the company noted occurred amid broader sector weakness driven by inflation concerns.
In a statement accompanying the announcement, Anglo Chief Executive Duncan Wanblad said, "Through this transaction, we will complete our exit from steelmaking coal."
The sale follows last years failed approach by Peabody, which withdrew a $3.78 billion bid for Anglos Australian coking coal assets after the two parties could not reach agreement on a lower price following a mine fire. Anglo confirmed on Monday that it continues to pursue arbitration against Peabody over the collapsed deal.
Dhilmar is a privately held mining group whose flagship asset is the Eleonore gold mine in Canada, which it acquired from Newmont Corp last year. Dhilmars chief executive is Alexander Ramlie, who has prior experience with several Indonesian mining companies, including PT Amman Mineral Internasional Tbk.
The transaction structure, the ongoing arbitration with Peabody, the companys stated use of proceeds to cut debt, and the timing of the sale ahead of a planned merger with Teck Resources are central elements Anglo highlighted as it positions itself away from steelmaking coal and toward a copper-centric combination.