Explosion at Queensland mine puts Peabody’s $6.3bn coal deal with Anglo American in doubt

New York-listed Peabody Energy back pedals on coal mine acquisition after explosion at Moranbah North in Queensland.

Looking towards the cutting for the Grosvenor conveyor and where the future Grosvenor Coal Stockpiles will be located. Picture: Supplied

New York-listed Peabody Energy has flagged pulling out of a $US3.8bn ($6.34bn) deal to buy Anglo American’s steelmaking-coal operations in Australia following a mine explosion.

Peabody is considering its options after Anglo was forced to stop work at one of Queensland’s biggest underground coal mines after a suspected explosion.

The immediate future of the Moranbah North mine, and the $US3.8bn deal between Anglo and Peabody, remains unclear.

Peabody announced that it was reviewing all options related to its acquisition of steelmaking coal assets from Anglo in the wake of the explosion.

“The company remains in conversation with Anglo American to better understand the impacts of the event. Peabody is preserving all rights and protections under its purchase agreements,” the St Louis-headquartered company said.

Peabody may seek to renegotiate the sale price based on the issues at Moranbah North, which have coincided with softer prices for metallurgical coal.

Moranbah North is the sister mine to Anglo’s Grosvenor operations, which remain closed after an underground fire in June 2024.

Workers were evacuated from Moranbah North on March 31 after monitors detected high levels of carbon monoxide.

Anglo said data indicated there had been a “small, contained” explosion in part of the mine where coal had been removed.

“Our next steps are working with Resources Safety and Health Queensland to investigate the incident and to then work towards re-entry and restart once it is safe to do so,” an Anglo spokesperson said immediately after the incident.

Anglo's Moranbah North Mine file shot. Picture: Supplied

RSHQ said it was likely there had been an explosion and issued a directive to suspend entry to the mine until the Anglo management could prove there is an acceptable level of risk.

Under the Peabody deal unveiled last November, Anglo is set to receive $US2.05bn at completion and a deferred cash consideration of $US725m, plus the potential for up to $US550m in a price-linked earn out and a contingent cash consideration of $US450m tied to the reopening of the Grosvenor mine.

The sale was a key plank of Anglo’s plans to strength its balance sheet in the wake of rebuffing a $75bn takeover offer from BHP.

Anglo struck the Peabody deal at well above consensus estimates of $US2.8bn as the diversified London and Johannesburg-listed miner looked to focus on core copper, iron ore and crop nutrient assets.

Anglo has been contacted for comment about the Peabody review of the Australian coal acquisition.

The Peabody share price jumped more than 9 per cent in trading on Tuesday and then 15.3 per cent post-market close.

The price spike came after US president Donald Trump signed executive orders aimed at boosting coal production and consumption in America.

Peabody, a big thermal coal producer in the US, is set to be one of the big winners from the move to reinvigorate the industry.

President Trump flagged using the Defense Production Act to boost coal production and linked the industry support to a need to increase electricity supply, so the US could dominate in the growing artificial intelligence sector.

He said energy secretary Chris Wright would be directed to invest in coal technology and put state regulators on notice that the Department of Justice would be asked to identify and challenge barriers to coal mining.

Originally published as Explosion at Queensland mine puts Peabody’s $6.3bn coal deal with Anglo American in doubt