Anglo American‘s AAUKF efforts to sell coal assets have hit a significant setback following a fire at its flagship Grosvenor mine in Queensland, Australia.
What Happened: Anglo American has been planning to sell its Australian coal assets, including Grosvenor, as part of a broader restructuring effort to fend off a $49 billion takeover bid from BHP Group BHP.
The fire at Grosvenor is particularly disruptive, given that the mine was expected to produce 2.3 million tons in the first half of the year and 3.5 million tons of Anglo's total 15-17 million tons of steelmaking coal output in 2024.
The fire not only disrupts the company's plans but also temporarily halts the coking coal market. The Grosvenor mine, a producer in Anglo’s portfolio, accounts for about 1.3% of global seaborne coking coal.
The incident has caused a $20 per ton increase in coking coal prices to $254/t on the Singapore Exchange, reversing a decline from $264/t to $234/t during June.
"The fire could mean the sale of Grosvenor and the nearby Moranbah North coal project — among Anglo's five mines of the fuel in Queensland — will take longer than expected, and the bidding price will be lower," noted Jeffries analyst Christoper LaFemina, per Bloomberg's report.
Why It Matters: The mine plays a critical role in the global supply of coal.
Despite the fire, Anglo American is determined to proceed with the divestment plan. Options being considered include selling the remaining coal business without Grosvenor or selling the assets individually. Nonetheless, Anglo received significant early interest in these assets.
The restructuring also includes selling its platinum unit, Anglo American Platinum (Amplats), and its diamond business, De Beers. These sales are part of Anglo's strategy to streamline operations and focus on core assets.
Per Northern Miner's report, BMO's analyst Colin Hamilton has lowered Grosvenor's production forecast to 2.5 million tons this year and 2.4 million tons next year, bringing the totals up to 16 million tons this year and 17 million in 2025 – in contrast to Anglo's guidance of 15-17 million tons this year and 17-19 million tons next year. While Anglo has not issued any warnings about its stockpiles for July deliveries, traders anticipate potential shortages in August and September.
The delay in production could significantly impact the supply chain, especially for customers in India, Japan, Korea, and Taiwan, who might need to increase their bids in the spot market to cover the shortfall.
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