Teck Resources' (TECK) merger partner Anglo American has agreed to sell its Australian steelmaking coal business to Dhilmar for cash proceeds of up to $3.88 billion, the company said Monday.

The transaction includes an upfront cash payment of $2.3 billion at closing and a price-linked earnout of up to $1.58 billion, Anglo American said.

The steelmaking coal portfolio includes stakes in the Moranbah North, Grosvenor, Capcoal, Dawson and other coal joint ventures in Australia.

Cash proceeds from the transaction, expected to close in Q1 2027, will be used to reduce net debt, the company said.

Anglo American also said it continues to pursue arbitration proceedings with Peabody Energy (BTU) related to Peabody's terminated agreement to acquire the coal portfolio.

Teck Resources shares were down nearly 1% in Monday premarket trading.