JOHANNESBURG (miningweekly.com) – Anglo American has completed the sale of its Eskom-tied thermal coal operations to broad-based, majority black-owned and -controlled South African mining company Seriti Resources, which is led by CEO Mike Teke, for R2.3-billion.
The acquisition includes the New Vaal, New Denmark and Kriel mines, as well as various mine life extension projects.
The three mines supply about 24-million tonnes a year of thermal coal to Eskom’s Lethabo, Tutuka and Kriel power stations.
“We are very proud to have concluded this defining transaction with Anglo American. Seriti is committed to building a new South African mining champion and to providing Eskom with cost-effective, long-term coal supply solutions,” Teke said at a media briefing on Thursday.
Seriti, which is 84% black-owned and chaired by Dr Anna Mokgokong, funded the acquisition through a combination of shareholder equity and acquisition finance raised from Standard Bank.
“It has been almost a year since the first announcement of the impending transaction was made and it’s been a complex transaction to bed down,” she said, adding that the size of the transaction was also significant.
“It is arguably one of the most important transformational mining transactions in the past decade. Seriti will become a prominent player in this field,” she said, adding that the company would take over the running of operations with immediate effect.
Anglo deputy chairperson Norman Mbazima agreed that the transaction represented a major step change in transformation in the coal sector in the country.
“It also reinforces Anglo American’s longstanding record and commitment to economic empowerment and sustainable transformation,” he said, adding that the sale represented one of the largest broad-based black empowerment deals in the coal and broader mining sector.
“Today is a big day for the South African mining industry,” he stated.
Anglo CEO Mark Cutifani, meanwhile, said the transaction was a continuation of the reshaping of the group’s global asset portfolio based on value and the optimal deployment of capital, while realising value for its shareholders and ensuring reliable supply of coal to Eskom.
Seriti Coal will supply 22% of Eskom’s yearly coal requirement from the three mines.
The New Vaal colliery is contracted to supply 17.8-million tons a year of coal to the Lethabo power station, New Denmark is contracted to supply 10.5-million tons a year to the Tutuka power station and the Kriel colliery is contracted to supply 8.5-million tons a year of coal to the Kriel power station.
The Lethabo and Tutuka coal supply agreements (CSAs) have a further 11 years to run, while the Kriel CSA expires in two years.
Teke noted that the first priority of the Seriti leadership team would be to engage with operational staff and other stakeholders to achieve a seamless ownership transition.
Around 3 000 former Anglo American employees, including on-mine management and, indirectly, more than 3 000 contractors will now form part of the Seriti team.
Black-owned groups Thebe Investment, Masimong, Zungu Investments Company and Community Investment Holdings own 25% apiece of Seriti Resources Holdings, which, in turn, holds 90% of Seriti Coal. Employees and communities own the 10% balance of Seriti Coal.
Meanwhile, Teke said Seriti would be interested in considering acquiring the Optimum coal mine, which is currently under business rescue.
The mine was placed in business rescue last week as a result of the financial difficulties facing its owners Tegeta Resources and Exploration. Employees at the mine have also recently embarked on strike action over the alleged nonpayment of their salaries.