Peabody Energy Reconsiders Queensland Coal Purchase
Peabody Energy is reviewing its $5.7 billion acquisition of Anglo American’s Queensland coal mines after an explosion at the Moranbah North mine.
Last week, a fire at the underground site halted production. It was the second fire at an Anglo American mine in under a year. The Grosvenor mine, just 15 kilometres away, caught fire in June and remains shut.
The company had planned to complete the deal by mid-2025. However, the recent explosion has raised serious concerns.
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Uncertainty for Hundreds of Workers
The deal includes four Anglo American mines—Moranbah North, Grosvenor, Aquila, and Capcoal. If the company walks away, the future of hundreds of workers remains uncertain.
Mining and Energy Union Queensland president Mitch Hughes acknowledged workers’ concerns.
“The workforce is understandably concerned about its future,” Mr Hughes said.
Despite ownership uncertainties, safety remains the top priority.
“Our priority is the safety of our members and workplaces,” he added.
Authorities, including Resources Safety and Health Queensland, are investigating the fire.
The longwall and shearer at Grosvenor Coal Mine. (Source: Anglo American/ABC News)
Peabody Weighs Its Options
Peabody issued a statement on Wednesday, confirming ongoing discussions with Anglo American.
“The company remains in conversation with Anglo American to better understand the impacts of the event,” the company stated.
“Peabody is preserving all rights and protections under its purchase agreements.”
The key question is whether the fires trigger a “material adverse change” clause. This clause allows Peabody to walk away if a major issue harms the business.
A spokesperson for Anglo American insisted the deal was still on track.
“Anglo American continues working with Peabody towards completion of the transaction announced in November 2024,” they said.
Community at Risk as Deal Hangs in Balance
Isaac Regional Council Mayor Kelly Vea Vea stressed the deal’s importance for local communities.
She highlighted the sale’s impact on more than just coal assets.
“We’re talking over 800 houses, water services, and water infrastructure,” she said.
She urged the government and company stakeholders to prioritise community well-being.
“I really hope the wellbeing of the workers and the communities are at the forefront,” Cr Vea Vea said.
Anglo American’s High-Stakes Strategy
Anglo American is selling its coking coal assets as part of a major restructuring effort.
Anglo CEO Duncan Wanblad aims to focus on copper, iron ore, and crop nutrients. The fire complicates his plan, as selling these coal mines is a key priority.
The deal gives Anglo $3.43 billion in cash upfront and more in future instalments. If the fire-damaged Grosvenor mine restarts and coal prices stay high, Anglo could receive an extra $1 billion.
Peabody’s History with Australian Coal
Peabody has a complicated history in Australia.
The company spent $4.9 billion buying MacArthur Coal in 2011, only to file for bankruptcy in 2016.
In November, Peabody CEO Jim Grech said the Anglo deal aligned with the company’s strategic shift toward steelmaking coal.
“The transaction is strategically aligned, immediately accretive, and highly synergistic,” he said.
However, since his statement, the global coal market has become more volatile.
Trade War, Tariffs, and Market Volatility
The ongoing trade war between the US and China has shaken the coal market.
China, the world’s largest steel producer, heavily influences coking coal demand. Any disruption could affect Peabody’s deal.
Australian premium coking coal futures on the Singapore Exchange hit $191 per tonne on Wednesday. Prices had dipped to $171 in March, down from $200 at the start of the year.
Peabody’s Stock Takes a Hit
Peabody’s share price dropped nearly 20% after US President Donald Trump introduced new tariffs last week.
However, the stock recovered half its losses on Tuesday after Trump signed an executive order supporting US coal mining.
What Happens Next?
Peabody and Anglo American remain in talks. The final decision will depend on fire investigation results and whether Peabody can renegotiate the deal.
For now, Queensland coal workers and local communities wait anxiously, hoping for clarity on their future.
