Glencore interested in Anglo coal assets

Anglo American’s most attractive mines are Moranbah North and Grosvenor while other assets include the Aquila project.

Resources giant Glencore could be shaping as the front runner for Anglo American’s coal mines contest with the group said to be lining up to buy the entire suite of Queensland assets on offer.

Anglo’s preference is to sell all the mines in one line, but not all likely suitors are in a position to write a big enough cheque to acquire the entire offering.

But Glencore has the bandwidth and is said to be a contender. Earlier, there were doubts it would bid as it bedded down a deal to buy Teck Resources.

Whitehaven Coal has ruled itself out, while BHP and Coronado Global are thought to be sidestepping the process.

Yancoal is also expected to compete, but could face objections from the Foreign Investment Review Board given its strong China backing, while other possibilities are Stanmore Coal, funded by Indonesian backers, and potentially the
US-based Peabody Energy which may gain some support from its major investor Elliott.

Expectations were that the assets would be on offer for $US5bn, but after a major fire at one of its best mines, Grosvenor, it may slice about $US1bn off the price.

The sale comes after Anglo announced a company break-up as it was fending off advances from BHP. The assets on offer are some of the best coal mines in the world.

Anglo American’s most attractive mines are Moranbah North and Grosvenor. Other assets in its Queensland portfolio are the Aquila project, an interest in Jellinbah, the potential Moranbah South project and its Capcoal and Dawson assets.

Anglo is one of the world’s leading metallurgical coal producers, with five mines in Australia. For 2023, the operations generated 15 million tonnes of coal equating to $1.3bn of earnings before interest, tax, depreciation and amortisation.

It is targeting production of about 20 million tonnes per annum at a unit cost of about $US100 a tonne by 2026.

Working on the sale are investment banks Morgan Stanley and Goldman Sachs and parties have been signing up to enter a data room.

Anglo is in the process of putting out the fire at Grosvenor, with oxygen cut off to the underground mine a week ago.

Anglo is pressing on with its divestment plans after promising shareholders a rebuild following the rebuff of the BHP takeover offer.

The opportunity is compelling for any group looking to gain access to some of the world’s best metallurgical coal. There are only seven mines that command coal prices of $US230 a tonne.

Four of them are owned by BHP while the others are South32’s Illawarra mine that it is selling and Anglo’s Grosvenor and Moranbah North.

In development are the Olive Downs and Eagle Downs mining projects, but they will not be of the same quality of premium metallurgical coal.