Peabody Energy Stock Surges After Scrapping $3.8 Billion Anglo American Coal Deal

Peabody Energy Corp. BTU has abandoned its planned $3.8 billion purchase of steelmaking coal assets from Anglo American AAUKF, citing a material adverse change following a March fire at the Moranbah North mine in Australia. The incident left the mine idled with no clear timeline for resuming longwall production.

The withdrawal comes less than a year after Anglo agreed to divest the portfolio to Peabody as part of a sweeping restructuring effort. The original deal, valued at up to $3.8 billion, was expected to close in 2025.

That package included an 88% stake in the Moranbah North joint venture, a 70% share of the Capcoal joint venture, and other key positions such as the Dawson and Roper Creek projects.

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Anglo American CEO Duncan Wanblad had described the sale as a critical move to streamline operations and sharpen the company's focus on copper, iron ore, and crop nutrients. The divestment followed its earlier $1.1 billion sale of a Jellinbah Group stake.

At the time of the announcement, Jim Grech, Peabody's president and CEO, had called the portfolio "world-class" and said it would create long-term value by integrating with Peabody's global operations.

However, after the fire at Moranbah North, the largest mine in the package, no revised terms were reached to offset the long-term impact.

Peabody subsequently terminated both the acquisition and a related agreement to sell the Dawson mine to PT Bukit Makmur Mandiri Utama.

Anglo had projected Moranbah would produce more than 5 million tons of saleable coal in 2025. Instead, the fire saddled the mine with roughly $45 million in monthly holding costs, undermining the deal's economics. The uncertainty around recovery ultimately became the deal's breaking point.

Peabody now plans to emphasize growth from its Centurion Mine in Australia, a 25-year premium hard coking coal project, while continuing a four-part strategy built on safe operations, returning 65-100% of free cash flow to shareholders, organic growth, and balance sheet strength. The company said it remains well-positioned despite the failed acquisition.

In the wider coal sector, peers include Arch Resources Inc. ARCH and Alpha Metallurgical Resources Inc. AMR. Investors also track energy-linked exchange-traded funds such as the VanEck Coal ETF KOL and the SPDR S&P Metals & Mining ETF XME.

Price Action: BTU shares are trading higher by 7.84% to $18.44 premarket at last check Tuesday.

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