Anglo American has sold its Eskom-tied domestic thermal coal operations in South Africa to a wholly-owned subsidiary of Seriti Resources.Seriti Resources is majority-owned by historically disadvantaged South Africans and led by a management team with extensive experience of operating and developing large coal mines in South Africa.
The Eskom-tied domestic thermal coal operations consist of the New Vaal, New Denmark and Kriel collieries, as well as four closed collieries.
[quote]The transaction will result in Seriti becoming the second largest provider of thermal coal to Eskom, supplying almost a quarter of Eskom’s current annual coal requirements.
The consideration payable for the operations as at 1 January 2017 is R2.3 billion.
Under the terms of the transaction, the consideration payable will be adjusted for cash flows generated by the operations between 1 January 2017 and the date on which the transaction is completed in order to determine the final payment to be made by Seriti Resources upon completion.
“We are pleased to have agreed the sale of our Eskom-tied domestic thermal coal operations in South Africa,” says Mark Cutifani, CEO of Anglo American.
“This transaction forms part of our ongoing commitment to reshape and upgrade our global asset portfolio, recognising appropriate value and further demonstrating Anglo American's longstanding support for the development and sustainability of South Africa's mining industry.”
“We believe that the sale to Seriti Resources supports transformation objectives for the industry as well as the country, while ensuring a sustainable, reliable and cost efficient supply of coal to Eskom,” states Norman Mbazima, deputy chairman of Anglo American South Africa.
“Seriti is excited about the transaction which represents a significant step-forward in our vision to become a black-controlled, broad based South African mining champion, and a coal player of significant size and scale,” comments Mike Teke, CEO of Seriti Resources.
“The transaction allows Seriti Resources to achieve its strategic objective of preserving and operating strategic energy assets for the benefit of South Africa and its people.
“Our structure brings together an experienced team capable of operating and developing large scale thermal coal assets and provides a unique mining opportunity for black women.
“The team looks forward to managing and growing the operations going forward, with a focus on ensuring their ongoing sustainability, given their strategic importance.”
The transaction is subject to conditions precedent that are customary for a transaction of this nature, including regulatory approvals in South Africa, as well as Eskom’s consent for the transfer to Seriti Resources of the coal supply agreements which govern the operations’ supply of coal to Eskom.
The transaction is expected to close by the end of 2017.
All images from Anglo American