Anglo Sale

AFR

It’s down from 30-plus tyre kickers to about six credible bidders at London-listed Anglo American’s $US5 billion ($7.38 billion) Queensland coal auction, as chief executive Duncan Wanblad races against the clock to appease angry shareholders.

Anglo American CEO Duncan Wanblad. Bloomberg

Anglo’s bankers, Goldman Sachs and Morgan Stanley, on Tuesday shortlisted about half a dozen parties to progress to the auction’s final round after collecting non-binding indicative bids on September 9. The five mines produce about 15 million tonnes of coal annually, which boiled down to $999 million net profit last year and more than $2.83 billion in the 12 months before that.

Street Talk can reveal shortlisted bidders include the highly acquisitive Stanmore Resources, and Indian mining group AvidSys which won the auction for Anglo’s Dawson mine in 2017 before it was shelved. Stanmore is bidding alongside the ultra-wealthy Indonesian Widjaja family’s GEAR and Matt Latimore’s M Resources.

Sources said Chinese-backed Yancoal was also well-placed ahead of the shortlisting, as was the New York-listed Peabody Energy whose C-suite is meeting with banks in Sydney this week. Swiss mining juggernaut Glencore, the most cashed-up of the lot, has been secretive on its status in the auction – although sources said it would be highly unusual for it to be left off the shortlist. Japan’s Mitsubishi as well as ASX-listed New Hope lobbed first-round bids but didn’t make the cut.

Of note, Anglo’s bankers have kicked out all parties that bid for a slice – and not whole – of the portfolio. Yet, they are encouraging these spurned suitors to engage with the shortlisted bidders, acknowledging the fact that the five mines’ widely varying geologies and locations makes it tough to reel in a single buyer.

The bidders are said to have valued the up-for-grabs portfolio at more than $US3 billion plus about $US700 million in rehabilitation costs. That’s a long way off the $US5 billion expectation before the fire at Grosvenor mine, whose earnings impact or reopening date is still a mystery to both Anglo’s shareholders and its bidders.

People close to the discussions said Anglo’s bankers asked bidders vying for 100 per cent of the portfolio to value each of the five mining complexes individually, and several suitors assigned zero or negligible value to the crown jewel, Grosvenor. The data room set up for bidders housed thousands of documents, including full copies of about a dozen joint venture agreements, but had nothing to offer on Grosvenor’s status. The fire was noted as a wee footnote in the information memorandum.

The big question is if Anglo will go through with selling its coal portfolio, or if the auction is just a charade to drum up a juicy-enough number that can be paraded to shareholders by the end of November, when BHP can again bid for the entire company.

Bidder sources said the way that the sell-side advisers are going about the proceedings suggests their orders are to sell the portfolio. But there are questions why Anglo isn’t divesting the portfolio asset-by-asset to maximise the value for its shareholders – or why it hasn’t paused the proceedings until there is clarity on Grosvenor’s status.

And of course, the memory of its 2017 Australia coal auction, which was eventually pulled, is still fresh in bidders minds.

When the winning bidder emerges, all eyes will be on the Foreign Investment Review Board as well as Japan’s Mitsui which is Anglo’s joint venture partner at several of the mines and holds pre-emption rights. Mitsui has exercised the said pre-emption rights in the past, and was the 100 per cent owner of Dawson before Anglo acquired its stake.

The Queensland coal auction is the most progressed of Wanblad’s multiple divestments which is being regarded as the biggest shake-up in its 107-year-long history.

The Brazilian nickel business is being prepared for sale by Standard Chartered, as first reported by Street Talk. The company is yet to appoint banks for the Platinum and diamond spin-offs.