Anglo American PLC's (LSE:AAL) plans to slim down its sprawling mining empire have hit a bump after US rival Peabody Energy pulled out of a $3.8 billion agreement to buy its steelmaking coal assets in Australia. Peabody had agreed last year to acquire Anglo's portfolio of metallurgical coal mines in Queensland, but the deal collapsed this week following a gas ignition incident at the Moranbah North mine in March. Anglo insists this event does not count as what lawyers call a "material adverse change", essentially a significant negative event that can void a contract, and says it will take the matter to arbitration to claim damages for wrongful termination. Citi's analysts describe the move as no surprise, noting that the market had already priced in the likelihood of Peabody walking away.