Anglo American sells Australian coal JV stake for $1.1 billion
Anglo American (LON: AAL) has agreed to sell its minority stake in an Australian coal mining joint venture for A$1.6 billion ($1.1bn), marking a significant step in its ongoing strategy to focus on on copper, iron ore and the Woodsmith fertilizer project in the UK.
The company announced a restructuring plan in May as part of its successful rebuttal of a $49 billion takeover approach from BHP (ASX: BHP), the world’s biggest miner. The plan focused on divesting from diamonds by spinning off or selling its 85% stake in De Beers, the world’s largest diamond producer by value. It also included restructuring its platinum operations, and selling its coal assets.
Anglo confirmed on Monday it would sell its 33.3% stake in Jellinbah Group to Zashvin Pty Ltd., the Australian power generation operator that already owns a third of the venture, alongside Japan’s Marubeni Corp. This transaction is expected to close in the second quarter of 2025.
Jellinbah holds a 70% stake in two metallurgical coal mines located in Queensland — Jellinbah East and Lake Vermont.
Anglo said it continues to work on divesting its remaining Australian coal operations, which are expected to fetch between $4 billion and $5 billion, adding that is in discussions with six interested buyers.
Market rumours indicate that the potential buyers include major names such as include Peabody, Yancoal and Glencore.
The Jellinbah sale is set to reassure investors of Anglo’s commitment to its restructuring goals as the sale of its Grosvenor metallurgical coal mine, the company’s larger coal assets, has faced delays due to a fire affecting the operation.
Grosvenor reached first output in 2016 but was closed in mid-2020 after an explosion that seriously injured five workers. It only returned to production in February 2022.
“Trophy asset” hard sale
Anglo’s plan to exit the diamond business has also been challenged, as the sector is going through a downturn. Sources close to the process have said that Anglo American would prefer to wait for a recovery in the diamond market before letting go of De Beers. The internal view at the company is that the world’s largest diamond producer should command a price that reflects its status as a trophy asset.
The company has done better when it comes to offloading its its platinum business. It sold in September about 5% of Anglo American Platinum, reducing its stake from 78.6% to 73.7%.
Anglo American’s current share price is 33% lower than BHP’s final all-share offer in May, which valued the company at £31.11 per share. Chief executive Duncan Wanblad is facing pressure to prove to shareholders that his strategy will generate value for them.
“Our process to sell the rest of our steelmaking coal business – being the portfolio of steelmaking coal mines that we operate in Australia – is now at an advanced stage and we are on track to agree terms in the coming months,” Wanblad said in the statement.
The company’s exposure to copper though its world-class assets in Latin America have attracted the attention of larger competitors looking to boost their involvement in the crucial green energy transition metal.
Anglo has set the ambitious goal of increasing annual copper production to more than 1 million tonnes by the early 2030s, thanks to its Chilean and Peruvian mines.