Anglo American has agreed to sell its Queensland steelmaking coal operations to UK-registered mining company Dhilmar for up to $5.43 billion ($US3.875 billion) cash.

The deal includes an upfront cash consideration of $3.22 billion ($US2.3 billion) and a price-linked earnout of up to $2.21 billion ($US1.575 billion). Anglo American will use the cash proceeds to reduce net debt.

“Our agreement for Dhilmar to acquire our steelmaking coal business in Australia is testament to the high quality of these assets and our people,” Anglo American chief executive officer Duncan Wanblad said.

“Dhilmar’s leadership brings considerable experience of operating major mining assets, including in steelmaking coal, in South-east Asia and Canada.

“We will work together with the Dhilmar team and with our workforce, local communities, government, customers, and partners to ensure a successful transition.”

Anglo American’s steelmaking coal portfolio includes an 88.0 per cent interest in the Moranbah North and Grosvenor joint ventures; and a 70 per cent interest in the Capcoal joint venture.

The company holds an 86.36 per cent interest in the Roper Creek joint venture; a 51.0 per cent interest in the Dawson joint venture, Dawson South joint venture, Dawson South Exploration joint venture and the Theodore South joint venture; and a 50.0 per cent interest in the Moranbah South joint venture.

Mr Wanblad said the agreement with Dhilmar represented another major step in the simplification of the company’s portfolio ahead of completing its merger with Teck.

“Through this transaction, we will complete our exit from steelmaking coal, delivering aggregate cash proceeds of up to $US4.9 billion ($6.85 billion), given the prior completion of the sale of our interest in the Jellinbah mine for approximately $US1 billion ($1.39 billion),” he said.

Legal fall-out from ditched Peabody agreement

Anglo American continues to pursue arbitration with Peabody after that miner backed away from a 2024 agreement to acquire the coal portfolio.

Anglo American said it remained confident that the ignition event at Moranbah North relied upon by Peabody in terminating its agreement did not constitute a Material Adverse Change.

Bloomberg News last month reported that Stanmore Resources (ASX: SMR), Mitsubishi Corp., and Indonesia’s BUMA Internasional were among the bidders keen on Anglo’s coal assets following the failed Peabody deal.