Peabody Energy (NYSE:BTU) has terminated purchase agreements with Anglo American (LSE:AAL,OTCQX:AAUKF) following a material adverse change (MAC) to the latter’s steelmaking coal assets.
In a Tuesday (August 19) announcement, Peabody said the decision follows an ignition event at Anglo’s Moranbah North mine in Bowen Basin, Queensland, an instance that made headlines in April.
ABC News Australia states that the ignition led to an evacuation following “dangerous levels of carbon monoxide.”
‘The two companies did not reach a revised agreement to cure the MAC that compensated Peabody for the material and long-term impacts of the MAC on the most significant mine in the planned acquisition,’ explained Peabody President and CEO Jim Grech, adding that the company’s portfolio is still well positioned moving forward.
Anglo CEO Duncan Wanblad said in a separate statement that the firm is confident in its belief that what happened at Moranbah “does not constitute a MAC” under the sale agreements with Peabody.
“Our view is supported by the lack of damage to the mine and equipment, as well as the substantial progress made with the regulator, our employees and the unions, and other stakeholders as part of the regulatory process towards a safe restart of the mine,” Wanblad said. Anglo recently signed a risk assessment that underpins the restart strategy.
Anglo announced the sale of its steelmaking coal portfolio to Peabody in November 2024 for US$3.78 billion.
The portfolio primarily consists of an 88 percent interest in the Moranbah North joint venture, a 70 percent interest in the Capcoal joint venture and an 86.36 percent interest in the Roper Creek joint venture.
“We are therefore very disappointed that Peabody has decided not to complete the transaction … We continue to reserve our rights under the definitive agreements, we are confident in our legal position and will shortly initiate an arbitration to seek damages for wrongful termination,” Anglo said in its Tuesday press release.
Peabody said it will continue to execute plans to create substantial value from its diversified global asset portfolio.
‘(Our) portfolio is very well positioned, with growing exposure to seaborne metallurgical coal highlighted by our new 25-year premium hard coking coal Centurion Mine, a low-cost seaborne thermal coal platform, and a leading U.S. thermal coal position capitalizing on rising power generation demand,’ noted Grech.
‘Moving forward, we intend to execute a four-pronged strategy for value creation.’
Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.