Anglo American has commenced arbitration proceedings against Peabody Energy following the latter’s withdrawal from a $3.78 billion agreement to purchase Anglo’s Australian steelmaking coal assets. Peabody cited a mine fire as the reason for backing out of the deal.
In August, Peabody pulled its bid for the coal assets after the two companies were unable to reach an agreement on reducing the purchase price in light of the fire incident. Anglo American was in the process of selling mines located in Queensland’s Bowen Basin, a leading region for steelmaking coal, as part of a broader strategy to divest or spin off non-core assets after a failed takeover attempt by BHP last year.
Operations at the Moranbah North mine were suspended in April due to an underground fire triggered by elevated gas levels. This situation allowed Peabody to invoke a clause in the agreement that permitted it to either withdraw or renegotiate if a significant adverse event occurred during the period from signing to completion.
Peabody expressed confidence in its position, stating that a material adverse change had occurred, justifying its termination of the purchase agreements. In a regulatory filing, the US coal miner indicated that Anglo American has returned $29 million of the $75 million deposit, while Peabody has requested the prompt repayment of the remaining amount.
In premarket trading, shares of Peabody Energy saw a slight increase, reaching $29.48.