Wescoal will acquire assets, liabilities and employees of the Arnot coal mine in Mpumulanga from Exxaro Coal Mpumulanga in partnership with Innovators Resources.
The shareholders of IR are previous employees of ECM who were retrenched during the shut-down in December 2015.
Their initiative to restart the Arnot Mine and unlock its value created the opportunity for Wescoal to become a partner.
Wescoal’s 50% interest is subscribed for in Arnot HoldCo whose only asset is its shareholding in Arnot OpCo, which in turn holds one asset only, namely the Arnot Mine.
Wescoal’s Interim CEO Dr Humphrey Mathe says:
“This acquisition will fast track the re-start of mining at Arnot, following the necessary approvals, such as Section 11 from the DMR and the assignment of all the rights and obligations of ECM under the CSA with Eskom to Arnot OpCo.
"Importantly, this is a significant broad-based empowerment transaction which will secure employment and provide employees and communities around the mine with equity participation as outlined in Mining Charter III and we are excited that Wescoal Mining is the enabling partner in the relationship with IR.”
This transaction will enable development of coal reserves that would have been sterilized by the mine closure process.
Arnot Mine is adjacent to the Arnot Power Station and coal will be delivered to the power station through a conveyer belt, resulting in a cost competitive advantage with minimum carbon tax impact.
“Wescoal’s strategy is focused on securing additional resources and strategic interests in coal and key logistics infrastructure and we have actively sought out acquisitive value-enhancing opportunities, such as this extensive coal resource base. It’s aligned with Wescoal’s strategy of generating value for Wescoal shareholders in a scalable, sustainable way,” Dr Mathe concludes.