US coal miner Peabody Energy said on Tuesday it had terminated its planned acquisition of Anglo American’s Australian steelmaking coal business, citing a “material adverse change" (MAC) tied to a March ignition event at Anglo’s Moranbah North mine, prompting Anglo to threaten arbitration.

The $3.78-billion deal, agreed in November 2024 and scheduled to close in April 2025, would have transferred Anglo’s steelmaking coal assets to Peabody. However, Peabody said the March 31 event, which halted longwall production at Moranbah North, undermined the economics of the transaction.

“The two companies did not reach a revised agreement to cure the MAC that compensated Peabody for the material and long-term impacts of the MAC on the most significant mine in the planned acquisition,” said Peabody CEO Jim Grech.

According to Peabody, Anglo has been incurring $45-million a month in holding costs since the March event, which derailed a plan for 5.3-million tonnes of saleable coal production this year.

Anglo, however, rejected Peabody’s stance, saying the incident did not constitute a MAC under the agreements. “Our view is supported by the lack of damage to the mine and equipment, as well as the substantial progress made with the regulator, our employees and the unions, and other stakeholders as part of the regulatory process towards a safe restart of the mine,” Anglo CEO Duncan Wanblad said in a statement.

"In fact, just in the last week we achieved a further important milestone, with our workforce signing off the risk assessment that underpins the restart strategy. We are, therefore, very disappointed that Peabody has decided not to complete the transaction," he stated.

Anglo said it had offered amended terms and technical options in recent months to address Peabody’s concerns. The company said it would initiate arbitration to seek damages for what it called a wrongful termination.

“Despite our strongly held view, we believe that it would have been better for all parties to avoid a legal dispute. On that basis we have invested significant effort and shown great flexibility over recent months to find a solution for Peabody, including proposing amended terms and technical options," said Wanblad.

Anglo said it would continue the restart process at Moranbah North and pursue an alternative sale process, citing renewed inbound interest in the assets.

Meanwhile, Peabody also terminated a related deal to sell its Dawson mine to PT Bukit Makmur Mandiri Utama. The US miner pointed to its wider asset portfolio and new 25-year Centurion hard coking coal mine as the basis for continued growth.