Anglo exits coal in $3.9B Dhilmar sale

Anglo American (LSE: AAL) has agreed to sell its Australian steelmaking coal business to privately held Dhilmar for as much as $3.875 billion (C$5.3 billion), completing its exit from the commodity and raising cash to cut debt ahead of its planned merger with Teck Resources (TSX: TECK.A, TECK.B; NYSE: TECK).

London-based Dhilmar is to pay $2.3 billion in cash at closing and make additional payments up to $1.58 billion more over five years through a price-linked earnout. The transaction, together with the earlier sale of its Jellinbah interest for about $1 billion, is to lift total cash proceeds from its coking coal exit to as much as $4.9 billion.

“Anglo’s metallurgical coal sale is a strong outcome that advances simplification, cuts leverage and supports liquidity for its special dividend,” Bloomberg Intelligence’s global head of metals and mining, Grant Sporre, said in an emailed statement to The Northern Miner. “Yet the $259-a-tonne hurdle [the contingent payment is tied to a set coal price] looks demanding, so realizing the full $1.58 billion contingent value might prove difficult over the next five years.”

The sale revives a disposal process that stalled after Peabody Energy’s (NYSE: BTU) withdrawal last November and helps Anglo press on with its wider corporate overhaul. The company has already split out its platinum business and continues to work on separating the diamond segment, De Beers, as it reshapes itself around copper, premium iron ore and crop nutrients before combining with Teck and redomiciling to Vancouver.

Failed deal

The sale covers Anglo’s stakes in the Moranbah North and Grosvenor joint ventures (JVs), the Capcoal JV, the Roper Creek JV, the Dawson group of JVs and the Moranbah South JV in Queensland.

The new deal gives Anglo a clearer path out of steelmaking coal than its failed agreement with Peabody . Peabody had agreed to pay up to $3.78 billion for the portfolio before walking away after a fire at Moranbah North.

Anglo said in its statement Monday that it is still pursuing arbitration regarding that failed agreement. It believes the fire incident did not amount to a “material adverse change.”

Anglo expects to close the new sale by the first quarter next year, subject to regulatory clearances and first-refusal rights held by JV partners.

“Agreement to sell its Australian steel-making coal business is the latest step in simplifying the business ahead of the merger with Teck,” analyst John Meyer of London-based broker SP Angel said in a note.

Coking Coal traded flat at $238 per tonne on Tuesday, having gained 27% over the past 12 months.

Streamlining assets

Dhilmar is a relatively new, private U.K. miner with Indonesian links. It owns the Éléonore gold mine in Quebec, after buying it from Newmont (TSX: NGT; NYSE: NEM) in November 2024 for $795 million in cash.

The new deal’s structure gives Anglo more money up front and removes the separate restart payment that complicated the Peabody sale. Sporre said the Dhilmar earnout handles coal-price risk and the Grosvenor restart more cleanly.

For its part, Teck has also simplified its portfolio by selling its coking coal portfolio to Swiss-based resource giant Glencore (LSE: GLEN) for $9.5 billion in July 2024. Glencore picked up a 77% interest in Elk Valley Resources (EVR) in British Columbia. Nippon Steel acquired a 20% stake and Posco Holdings acquired a 3% stake in EVR, the balance of interest not sold to Glencore.

Approvals pending

The blockbuster $53 billion merger of Anglo American and Teck won Canadian government approval in December. While the merger has secured key approvals in Canada and Australia, regulatory reviews continue in Europe, Japan, South Korea, the U.S, Chile and China.

The merged company, Anglo Teck, will keep its primary listing in London, retaining FTSE UK index inclusion, alongside listings on the JSE, TSX and NYSE.