Anglo American agreed to sell its steelmaking coal assets to Dhilmar for up to $3.875 billion in cash, completing a planned exit after Peabody Energy withdrew from a similar deal. The London-listed miner simplifies its portfolio ahead of a merger with Teck Resources that will create one of the world's largest copper producers.

The new deal comprises a $2.3 billion upfront payment and up to $1.575 billion in performance-related fees. Anglo American initiated the sale after Peabody backed out following a fire at a mine central to their $3.78 billion agreement. The company continues arbitration proceedings against Peabody despite this successful sale.

The sale represents a strategic shift for Anglo American as it focuses on copper production. The mining giant will use cash proceeds to pay down net debt, strengthening its balance sheet before merging with Teck Resources. Dhilmar, a privately held U.K. mining company, gains substantial steelmaking coal assets through this transaction.