May 18 (Reuters) – Anglo American said on Monday it will sell its steelmaking coal mines in Australia to UK-based miner Dhilmar for up to $3.88 billion, exiting the sector and simplifying itself ahead of a planned merger with Canada’s Teck Resources.
London-listed Anglo is selling the mines in Queensland’s Bowen Basin, the world’s top steelmaking coal region, as part of its plan to divest or spin off non-core assets and cut debt ahead of completing the merger with Teck Resources that will form a copper-focused heavyweight.
The deal comprises $2.3 billion upfront cash and up to $1.58 billion linked to coal prices, with proceeds earmarked to cut debt, the company said.
Its shares fell 1.7% amid sector-wide weakness on inflation fears.
“Through this transaction, we will complete our exit from steelmaking coal,” Anglo CEO Duncan Wanblad said in a statement.
Last year, Peabody withdrew its $3.78 billion bid for Anglo’s Australian coking coal assets, after the two companies failed to agree on lowering the price following a mine fire.
In parallel with Monday’s deal, Anglo continues to pursue arbitration against Peabody over the collapsed deal, the British company said.
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. Its CEO is Alexander Ramlie who has worked for several Indonesian mining companies, including Indonesian gold and copper company PT Amman Mineral Internasional Tbk.
(Reporting by Yadarisa Shabong in Bengaluru. Additional reporting by Melanie Burton in Melbourne; Editing by Mrigank Dhaniwala, Bernadette Baum and Emelia Sithole-Matarise)
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