Fire at Anglo American’s Grosvenor mine likely to affect met coal operations

A fire at Anglo American's Grosvenor metallurgical coal mine in Australia will impact its met coal business, broker Jefferies reported. The fire, which started Saturday, has halted operations for several months. Grosvenor contributes significantly to Anglo's coal value, and this incident may delay asset sales and affect market dynamics..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..Join us for BizNews' first investment-focused conference on Thursday, 12 September, in Hermanus, featuring top experts like Frans Cronje, Piet Viljoen, and more. Get insights on electricity and exploiting SA's gas bounty from new and familiar faces. Register here..By Melanie Burton.A fire at Anglo American's AAL.L Grosvenor metallurgical coal mine in Australia is likely to negatively affect its Australian met coal business, broker Jefferies said in a note on Monday. .___STEADY_PAYWALL___.Anglo American said on Sunday it was battling an underground fire at the coal mine in Australia's Queensland state after a blaze ignited there on Saturday. There were no injuries, but it said it expects the mine to remain shut for several months..KEY QUOTE."On our estimates, Grosvenor accounts for ~30% of the $4.5bn value we attribute to Anglo's met coal business. This fire could significantly damage the timing and valuation of a potential sale of Moranbah North and Grosvenor.".WHY IT'S IMPORTANT.Anglo American rebuffed a $49 billion offer from BHP Group BHP.AX in May in favour of a strategy laid out by CEO Duncan Wanblad that included a process to sell its coal, nickel and diamond assets..At the time, investors said Wanblad would have to meet his targets promptly, or the company would be vulnerable to another bid by "all the usual suspects"..The fire is the second at the mine since 2020, when a similar outbreak injured five workers, and Anglo said then it would work to ensure such an incident never happened again, Jefferies noted..BY THE NUMBERS.Anglo American's steelmaking coal business expects to produce around 8 million tonnes in the first half of 2024, of which Grosvenor will contribute around 2.3 million tonnes..Anglo had guided to 15 to 17 million tonnes for the year, of which Grosvenor was expected to contribute around 3.5 million tonnes due to mine planning..Jefferies assumes the mine will be offline until mid-2025 and sees the closure tightening the 90 million tonne per year seaborn met coal market..MARKET REACTION.Anglo American shares closed at 2502 pence on Friday..THE RESPONSE.Anglo said in a statement to Reuters that it still intends to divest its steelmaking coal business and that it had received strong interest from a wide range of potential buyers.. "The incident underground at Grosvenor is serious and it will take some time to assess the impact on the mine and implement remedial action," it said, adding it was focused on ensuring the safety and wellbeing of its workforce and local communities.."We will assess the timing of the divestment process in the coming weeks but we are continuing the preparation work in the meantime.".Read also:.How a rattled SA became Anglo's best defence against BHP bid🔒 CEO Wanblad said no $49bn, must now dismantle Anglo American🔒 Anglo fending off BHP is far from its final battle: Chris Hughes.SOURCE: REUTERS

Fire at Anglo American’s Grosvenor mine likely to affect met coal operations

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