Anglo American sells Australian coal JV stake for $1.5B

Anglo American (LSE: AAL) has agreed to sell its minority stake in an Australian coal mining joint venture for A$1.6 billion ($1.5 billion), marking a significant step in its strategy to focus on copper, iron ore and the Woodsmith fertilizer project in Britain.

The company’s one-third stake in Jellinbah Group is being sold to Zashvin, Anglo said on Monday. The Australian power generation operator already owns a third of the venture, alongside Japan’s Marubeni. The transaction is expected to close in the second quarter of 2025. Jellinbah holds a 70% stake in two metallurgical coal mines in Queensland — Jellinbah East and Lake Vermont.

Six interested buyers are in discussion with Anglo for its remaining Australian coal operations, the company said. They’re expected to fetch between US$4 billion and US$5 billion. Potential buyers could include majors such as Peabody Energy (NYSE: BTU), Yancoal Australia (ASX: YAL) and Glencore (LSE: GLEN), according to market speculation. 

Anglo announced a restructuring plan in May as part of its successful rebuttal of a US$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 CEO 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,” Wanblad said in the statement. “We are on track to agree terms in the coming months.”

Fire delay

The Jellinbah sale may reassure investors of Anglo’s commitment to the restructuring goals. 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.

Anglo’s plan to exit the diamond business has also been challenged as the sector experiences 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 De Beers should command a price that reflects its status as a trophy asset.

The company is progressing in the offloading its its platinum business. In September, it sold about 5% of Anglo American Platinum, reducing its stake from 78.6% to 73.7%.

 

Copper assets 

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. But Anglo American’s share price has slid to a third lower than BHP’s final all-share offer in May, which valued the company at £31.11 ($56) per share. 

Shares in Anglo American closed 1.3% higher in London on Monday at £24.28 apiece, valuing the company at £32.4 billion. 

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. The company’s copper output decreased by 13% in this year’s third quarter compared to the same period in 2023. It produced 575,000 tonnes over the first nine months, reflecting a 4% year-over-year decline.

Despite this drop, the company maintained its 2024 copper production guidance, aiming for a full-year output between 730,000 and 790,000 tonnes.