Seriti Resources is the new name in coal mining in South Africa – operating three of Anglo American’s previously owned assets and taking up the position as the lead bidder for the South32 coal assets as well.
The company today operates the New Vaal, New Denmark and Kriel mines as well as various mine life-extension projects and closed mines. Signing of the transaction was announced in April 2017, at a purchase price of R2.3 billion.
This article first appeared in Mining Elites in Africa 2020
The three mines supply approximately 24 Mtpa of thermal coal to Eskom’s Lethabo, Tutuka and Kriel power stations which collectively account for almost a quarter of South Africa’s current power supply.
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In August 2019 Seriti Resources shared the exciting news that, following a comprehensive and competitive bid process, it had entered into exclusive negotiations regarding the sale and acquisition of South32’s South Africa Energy Coal (SAEC) business.
It concluded the acquisition agreement with South32 to acquire their 91.835% shareholding in South Africa Energy Coal (SAEC) in November 2019.
Located in the coalfields of Mpumalanga, SAEC includes four collieries – Khutala Colliery, Klipspruit Colliery, Middelburg Colliery and the Wolvekrans Colliery – as well as three processing plants, producing energy coal for the domestic and export market.
Included in the Seriti Resources side of the transaction are two trusts which will acquire equity on behalf of employees and communities. The remaining 8.165% interest in SAEC is held by a black economic empowerment consortium led by the Phembani Group.
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The purchase price includes an up-front cash payment of approximately R100 million. In addition, South32 will receive 49% of the free cash flow generated by SAEC from the date the transaction is concluded until March 2024. That component will be limited to a maximum of R1.5 billion a year.
“The SAEC acquisition will enable us to offer further secured, long-term coal supply solutions to Eskom as a demonstrable commitment to sustainably supporting South Africa’s energy needs.
The combination of our energy coal businesses will realise further operational and technical efficiencies enabling us to better service our customers by offering competitive energy solutions,” said Mike Teke, CEO of Seriti at the time of the announcement.
Comments from the judges
Significant investment in the South African mining sector by South African investors, producing a quarter of SA’s power supply for Eskom. Sound consolidation of Anglo/South32 assets,” Tom Quinn