(Bloomberg) — A fire at Anglo American Plc’s largest coal mining project in Australia has brought production to a halt. The mining company said it could take several months to extinguish the blaze.
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A methane explosion on Saturday caused a fire at the underground Grosvenor mine, which accounts for about 30% of the company’s annual coking coal production in Queensland state, Anglo said in an emailed statement on Monday. No one was injured.
“The mine team is working with specialist teams from the Queensland Mines Rescue Service and regulators to extinguish the underground fire before steps for a safe return to the mine can be assessed,” Anglo said in the statement. “Due to the likely damage underground, these procedures are expected to take several months.”
The fire could complicate the London-based company’s plan to sell its assets that produce the fuel used to make steel. The company had previously rejected a $49 billion takeover by BHP Group. After the world’s largest mining group pulled out in May, Anglo’s chief executive Duncan Wanblad announced a radical overhaul and restructuring of the company. Analysts expect a quick sale of the coal portfolio due to its relatively high value.
The fire could mean that the sale of Grosvenor and the nearby Moranbah North coal project – one of Anglo’s five coal mines in Queensland – will take longer than expected and the bid price will be lower, Jefferies analyst Christopher LaFemina said in a note on Monday. The analyst had expected those two mines to fetch about $3 billion.
The expected production cut due to the fire will weigh on Anglo’s share price and asset sales, Marina Calero, analyst at RBC Capital Markets, said in a note.
Grosvenor first began production in 2016, but was closed in mid-2020 following an explosion that seriously injured five workers. It did not resume production until February 2022.
The coal seams of Anglo’s mines contain relatively high levels of methane. Anglo extracts about 60% of the methane gas from the seams and then feeds it into Queensland’s electricity grid.
(Updated with more details throughout)
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