Anglo American has appointed three banks to handle the sale of its coal-making steelmaking businesses, according to two people familiar with the situation. Analysts estimate these businesses to be worth up to $5 billion. This move is a part of a larger reorganization aimed at thwarting an approach from rival BHP.
After BHP’s failed takeover attempt, Anglo’s CEO Duncan Wanblad made an announcement in May. He stated that the company would soon begin selling its five operational coal mines, development projects, and joint ventures in Australia. This was part of a larger plan to divest less profitable assets and concentrate on increasing copper output.
The miner is currently fighting the fire that broke out at its Grosvenor mine in Queensland on June 29. Consequently, it will probably take several months to assess the damage and reopen.
Anglo has enlisted Goldman Sachs (GS), Morgan Stanley (MS), and Centerview Partners, all former company brokers, to assist with the asset sale. This move signals the start of the next stage of the divestment, according to two sources.
GS, MS, and Anglo all declined to comment. Centerview did not respond to requests for comment right away.
According to analysts, the timing of the asset valuation and sale procedure was probably affected by the Grosvenor mine incident. About thirty percent of the $4.5 billion the brokerage assigns to Anglo’s steelmaking coal division comes from the mine, according to Jefferies.
Anglo had stated in May that the restructuring would be well underway by the end of 2025. The restructuring included demerging its platinum holdings in South Africa and divesting or closing its nickel business. Additionally, the company demerged or sold its diamond unit, De Beers.
After Russia’s invasion of Ukraine, the price of metallurgical coal surged to a record $635 a ton in March 2022 due to worries about global supply. On Tuesday, it was trading at about $250.
According to Anglo’s annual report, the Grosvenor mine produced 2.797 million tons of metallurgical coal in 2023, or 17% of the company’s total coal output. It projected that the mine would yield 3.5 million tons in 2024. The business is the third-biggest exporter of metallurgical coal in the world.
By May 2020, Grosvenor had already been closed for a year due to an explosion that left five workers injured. Moreover, a government investigation was prompted because the facility kept producing more methane gas than it could remove. Following the implementation of safety precautions, June saw no reported injuries.
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