Anglo American has said it will seek damages after Peabody Energy withdrew its $3.8 billion bid for the London-listed group’s Australian coking coal assets.
Peabody, an American coal mining company, pulled out of the deal after failing to renegotiate a lower price in light of a production pause caused by a fire.
It had agreed to acquire the mines located in the Bowen Basin in Queensland, the world’s leading region for steelmaking coal, as part of its strategy to become a producer of the key raw material.
Operations at the Moranbah North mine were halted in April after an underground fire broke out due to high gas levels. That led Peabody to trigger a clause that allows it to break or renegotiate the deal if a significant negative event occurs between signing and completion.
Peabody said in May that the incident represented a “material adverse change” to its agreement to buy the assets from the London-listed group and that there was “significant uncertainty around the transaction”.
Jim Grech, Peabody’s president and chief executive, said on Tuesday: “The two companies did not reach a revised agreement to cure the material adverse change that compensated Peabody for the material and long-term impacts of the material adverse change on the most significant mine in the planned acquisition.”
Anglo disputed that the fire and mine closure constituted a material adverse change, due to the lack of damage to the mine or equipment and progress made towards restarting the mine.
“We are therefore very disappointed that Peabody has decided not to complete the transaction,” Duncan Wanblad, Anglo’s chief executive, said.
Anglo said it would start arbitration proceedings, a dispute resolution method, to seek damages for what it claimed was wrongful termination.
Wanblad said that given strong interest for the assets during the bidding process, Anglo was confident an alternative buyer could be found.
Anglo had agreed to sell its steelmaking coal assets to Peabody as part of a wider restructuring prompted by BHP’s $49 billion failed bid for the group in 2023. This has led it to sell or spin off non-core assets to focus on copper and iron ore.
Shares in Anglo American rose by 40p, or 1.9 per cent, to £21.71.