Anglo American seals R18 billion deal

Anglo American has sold its minority interest in Queensland-based coal company Jellinbah as part of a wider effort to simplify its business.

Anglo American informed shareholders on Wednesday, 29 January, that it has completed the sale of its 33.3% interest in Jellinbah to Zashvin for AUS$1.6 billion (around R18.64 billion).

Zashvin was an existing 33.33% shareholder in Jellinbah, alongside Anglo American and Japan-based Marubeni.

Jellinbah is a joint venture that owns a 70% interest in the Jellinbah East and Lake Vermont steelmaking coal mines in Australia.

Anglo American has received AUS$1.4 billion (around R16.30 billion) in addition to the AUS$228 million (R2.66 billion) the company already received for this sale.

This brings the total cash proceeds from this sale to AUS$1.6 billion, or around R18.64 billion.

This sale was first announced on 4 November 2024, and completion was originally expected in the second quarter of 2025.

Anglo American CEO Duncan Wanblad said the cash proceeds from this sale will further strengthen the company’s balance sheet. 

This sale forms part of a wider restructuring strategy taking place at Anglo American that was announced last year in response to an unsolicited $49 billion takeover proposal from the world’s biggest miner, BHP.

This offer was eventually abandoned after Anglo American repeatedly rejected it, with the two companies unable to agree on the complicated deal structure.

However, BHP’s bid forced Anglo American to accelerate an overhaul of its business.

This includes plans to offload its platinum business, Anglo American Platinum, and to exit coal, diamonds and nickel.

This restructuring is set to result in a much simpler mining company focused on iron ore and copper, in which Anglo has extremely high-quality production.

Anglo’s bet on these metals is a play on the green transition, as both resources are vital for the buildout of new electricity infrastructure.

Research analyst at Melville Douglas, Loftty Mmola, said the company’s copper mines and iron ore are its two largest and most consistent earners, providing a stable base for future growth.

BHP’s main target in buying Anglo was the company’s copper assets in South America, which have been struggling in recent years.

In February last year, the company announced big output drops from its flagship copper business in South America.

Mmola explained that Anglo has to reinvent itself to stay competitive with global mining giants. 

It will have to unbundle some key assets to free up capital and management time and to enable it to capitalise on emerging trends in the mining industry. 

Chief among these is the focus on maximising the return on its high-quality copper assets in South America and iron ore deposits in South Africa.

Wanblad said Anglo American’s restructuring will give the company high-quality and well-sequenced growth options across each product vertical, including a clear path to increase annual copper production to more than one million tonnes over the next decade.

He said the sale of its stake in Jellinbah marks the first step in the company’s divestment of its steelmaking coal portfolio.

“We have also made good progress towards the completion of the sale of the balance of our steelmaking coal portfolio to Peabody for additional cash consideration of up to $3.8 billion,” he said.

“We have moved at pace to simplify Anglo American to create an exciting and differentiated investment proposition focused on our world-class copper, premium iron ore and crop nutrients businesses.” 

He explained that this more cash-generative and higher-margin portfolio will offer Anglo American greater through-the-cycle resilience.