Metals giant Anglo American has announced the sale of its Eskom-tied domestic thermal coal operations in South Africa to a wholly owned subsidiary of Seriti Resources Holdings, a company 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.
Anglo said the Eskom-tied domestic thermal coal operations consist of the New Vaal, New Denmark and Kriel collieries, as well as four closed collieries. 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 upon completion.
Mark Cutifani, Chief Executive of Anglo America said they are pleased to have agreed on the sale of our Eskom-tied domestic thermal coal operations in South Africa. “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,” he said
Norman Mbazima, Deputy Chairman of Anglo American South Africa said they believe that the sale to Seriti supports transformation objectives for the industry as well as the country, while ensuring a sustainable, reliable and cost-efficient supply of coal to Eskom.
Mike Teke, Chief Executive of Seriti said his company 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. “The Transaction allows Seriti to achieve its strategic objective of preserving and operating strategic energy assets for the benefit of South Africa and its people”, said Teke. He further stated that the 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,” he explained
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 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.
