Shares in mining group Anglo American fell on Wednesday after US group Peabody Energy walked away from a $3.8 billion deal to buy its steelmaking coal business.

Peabody announced on Tuesday it had terminated the purchase agreements following a fire at the deal’s flagship mine, citing it as a material adverse change — a reason to exit.

The Moranbah North Mine in Australia has been closed since the fire at the end of March, and the two firms have failed to agree on compensation for the incident.

Anglo said it would soon begin arbitration to seek damages for wrongful termination of the contract, as it did not consider a material adverse change to have taken place.

“Our view is supported by the lack of damage to the mine and equipment, as well as the substantial progress made… towards a safe restart of the mine,” Anglo chief executive Duncan Wanblad said in a statement.

Shares in Anglo were down around two per cent on London’s top-tier FTSE 100 index on Wednesday morning.

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The deal, announced in November, would have marked Anglo’s exit from the steelmaking coal business.

The company has shifted focus to its higher value businesses, like copper and iron, after rejecting a $49 billion takeover offer from mining rival BHP.

The move also came as countries move away from highly polluting coal production to meet net-zero carbon emissions, including a deal struck by some at the COP29 climate summit not to build any new unabated coal-power plants, which produce coal without the use of carbon capture technology.

AFP