ArcelorMittal, the globe's biggest steel producer, late on Tuesday backed out of its Macarthur Coal joint $5.1bn purchase with Peabody Energy, according to the company.

The group originally joined the deal, which will be the second largest coal takeover this year, to help advance its metallurgical coal supplies.

The steel maker has now left partner Peabody Energy to pursue the takeover on its own, saying: “ArcelorMittal has determined that it would no longer be appropriate to allocate substantial capital to the acquisition of a non-controlling, minority business interest.”

Peabody welcomed the news saying the deal will be fully accretive within 12 months, and is to be funded with cash and debt.