Peabody Energy has called off its planned acquisition of Anglo American's steelmaking coal (SMC) assets, citing a material adverse change (MAC) linked to unforeseen challenges at the Moranbah North Mine.
The cancellation comes after an ignition event at the mine nearly five months ago, with the cause still undetermined and no clear timeline for resuming sustainable longwall production.
Peabody president and CEO Jim Grech said: “The two companies did not reach a revised agreement to cure the MAC that compensated Peabody for the material and long-term impacts of the MAC on the most significant mine in the planned acquisition.
“Peabody has chosen to terminate the transaction and will continue to execute our plans to create substantial value from our diversified global asset portfolio.”
The acquisition, initially set to conclude in April 2025, faced uncertainty as Anglo American reported monthly holding costs of $45m at Moranbah North.
The mine's projected output of 5.3 million tonnes (mt) of saleable production in 2025 remains in limbo, with no schedule for the return of longwall production at the anticipated volumes and costs.
Anglo American CEO Duncan Wanblad said: “We are confident in our belief that the event at Moranbah North in March does not constitute a MAC under the sale agreements with Peabody. Our view is supported by the lack of damage to the mine and equipment, as well as the substantial progress made with the regulator, our employees and the unions, and other stakeholders as part of the regulatory process towards a safe restart of the mine.
"In fact, just in the last week we achieved a further important milestone, with our workforce signing off the risk assessment that underpins the restart strategy. We are therefore very disappointed that Peabody has decided not to complete the transaction.
“Despite our strongly held view, we believe that it would have been better for all parties to avoid a legal dispute," he said.
Wanblad also emphasised that the company has put in considerable work and demonstrated considerable adaptability to reach an agreement with Peabody, suggesting changes and technical alternatives.
However, following Peabody's choice to back out of the deal, the company's attention is now on safely resuming operations at Moranbah North and maximising the value from its entire SMC portfolio.
Wanblad added: “We continue to reserve our rights under the definitive agreements, we are confident in our legal position and will shortly initiate an arbitration to seek damages for wrongful termination."
Furthermore, Peabody has also terminated a related sale agreement with PT Bukit Makmur Mandiri Utama for the Dawson Mine.
Peabody is committed to distributing 65–100% of its available free cash flow to its shareholders, mainly via share repurchases, while also seeking organic growth through its vast asset base and upholding a robust balance sheet through strict capital management.
