ANGLO American finally has runs on the board in its far-reaching restructuring strategy announcing on Monday an agreement to sell its 33.3% stake in Jellinbah Group, a joint venture which has a 70% stake in two metallurgical coal mines in Australia.
The mines – Jellinbah East and Lake Vermont – will be sold for A$1.6bn (US$1.06bn) to Zashvin Ltd, a 33.3% shareholder in Jellinbah Group. The mines contributed $153m to group Ebitda in the first half of Anglo American’s 2024 financial year.
The transaction represents Anglo’s first step in a proposal announced in May to sell its metallurgical coal, platinum and diamond interests.
Anglo CEO Duncan Wanblad said today progress had also been made in selling the balance of his company’s metallurgical coal mines, saying the process was “now at an advanced stage and we are on track to agree terms in the coming months”. The mines are guided to produce between 15 million and 17 million tons this year.
The sale of the stake in Jellinbah Group is subject to customary regulatory approvals and is expected to complete in the second quarter of 2025, Anglo American said.
Anglo does not operate the Jellinbah East or Lake Vermont mines, nor does it market coal from either of the operations, the group said. The mine is equal to about a fifth of Anglo’s total coking coal production.
“Inasmuch as the achieved price is roughly in line with our estimate and higher than market expectations, we view this as a positive outcome,” said analysts at Bank of America in a report. The bank values Anglo’s metallurgical coal assets at $3.8bn to $5.4bn which compares to Anglo’s median sell-side valuation on coking coal assets at $3.3bn.
Wanblad said in September the company was in “round two” regarding the sale of the metallurgical coal mines. This was despite a fire that damaged on the mines, Grosvenor, leading to its suspension on June 30 following a gas ignition.
Grosvenor was “looking good,” said Wanblad at the time. “From what the guys can see, given the access we have, the orebody is intact and the damage is not as extensive as might have been feared given the size of the fire.”
“We are now in round two and we have a handful of selected tenders that will take us through to the end,” he said Wanblad. “So I hope with a fair wind in commodity prices we will get to a signing by the end of this year or early next year.”
“We are making excellent progress with our simplification of Anglo American to create an exciting and differentiated investment proposition focused on our world-class copper, premium iron ore and crop nutrients assets – all future-enabling products,” said Wanblad today.
The restructuring comes against a background of uncertainty as to whether BHP will make a second attempt at a takeover of Anglo American.
When Wanblad announced Anglo’s simplification strategy in May it was amid a takeover proposal from BHP, which was eventually rebuffed. In terms of UK takeover rules, BHP can make a second swoop on Anglo at the end of this month.
The Australian miner has been far from clear on its intentions saying twice that it had “moved on” from Anglo before clarifying to the UK takeovers panel last week that these comments did not mean it was ceasing an interest in the company.
