RPT-UPDATE 2-Anglo American to sell Australian coal mines for up to $3.88 billion

* Deal ⁠includes $2.3 billion upfront, $1.58 billion ​tied to prices

* Anglo continues arbitration with Peabody over previous failed coal asset ​sale

* Proceeds ‌from sale will be used to reduce Anglo American's debt

May ⁠18 (Reuters) - Anglo American said on ⁠Monday it will sell its ​steelmaking coal mines in Australia to UK-based miner Dhilmar for up to $3.88 billion, exiting the sector, cutting debt and ​streamlining ‌assets ahead of a planned merger with Canada's Teck Resources.

London-listed Anglo is selling the mines in Queensland's Bowen Basin, the world's top steelmaking coal region, as ​part of its plan to divest or spin off ‌non-core assets ahead of completing the merger with Teck Resources that will form a ‌copper-focused heavyweight.

The deal comprises $2.3 billion upfront cash and up to $1.58 billion linked to coal prices, with proceeds earmarked to ​cut debt, the company said.

"Through this transaction, we will complete our ‌exit from steelmaking coal," Anglo CEO Duncan Wanblad said in a statement.

Last year, Peabody withdrew its $3.78 billion bid for ⁠Anglo's ⁠Australian coking coal assets, after the ‌two companies failed to agree on lowering the price following a ​mine fire.

In ​parallel with Monday's deal, Anglo continues ‌to pursue the arbitration with Peabody over the collapsed deal, the British firm said.

Anglo American