Johannesburg, South Africa — MININGREVIEW.COM — 16 September 2009 – Sasol Limited “’ the world’s largest producer of motor fuels made from coal “’ says the agreement to sell a stake in its coal business to South African diversified miner Exxaro Resources Limited to comply with black ownership laws, has collapsed.
In a statement issued here, Sasol said Exxaro Coal Mpumalanga’s decision to withdraw is a setback to Sasol’s attempts to meet South African rules on black ownership. Sasol is now “actively pursuing alternatives,” it said.
The government is reviewing black ownership in the industry after passing legislation four years ago compelling mining companies to sell 15% of their assets to black investors by 2009 and 26% by 2014. The law aims to compensate for discrimination suffered during apartheid, which ended in 1994.
“We’ll do everything in our power to try to comply with the mining charter,” Sasol director Benny Mokaba told reporters.
Exxaro’s decision follows “a review and prioritisation of its capital expenditure and project pipeline,” the company said in a separate statement. “The partnership with Igoda Coal is no longer viable for Exxaro,” it said. Exxaro financial director Wim de Klerk didn’t respond to a message left on his mobile phone.
Sasol’s mining unit and black investor group Eyesizwe Coal Limited created Igoda Coal Limited about three years ago to mine at least 3.6 million metric tonnes a year of export coal and supply about 4 million tonnes a year to Sasol’s fuels plant in Secunda. Eyesizwe owned 35% of Igoda and Sasol the rest. Exxaro later acquired Eyesizwe.
Earlier, Sasol reported a 39% drop in annual profit after oil prices declined. Higher costs in the chemicals business and a “significantly” stronger South African rand will probably reduce earnings in the year to June 2010, it added.