Diversified miner South32 will start a process to broaden the ownership of its South Africa Energy Coal (SAEC) business, in September.
“We have been very clear that we don’t plan to own an interest in energy coal in the long term, and it has never been a better time in terms of where South Africa is at the moment, what Eskom needs around coal, and some liquidity to the buyers out there.
“We haven’t formally started the process yet, but certainly we’ve had some strong interest from numerous parties, and we will keep that process up in the second half of the calendar year,” CEO Graham Kerr said on Wednesday.
The miner in 2017, announced its intention to manage SAEC, which includes the Khutala, Klipspruit, Middelburg and Wolwekrans collieries and processing plants in Mpumalanga, as a standalone business, allowing the company to collapse its regional model and simplify the company.
This is expected to deliver $50-million a year in cost savings from the 2020 financial year onwards.
Kerr on Wednesday said the group was making progress in establishing SAEC as a standalone business, with a separate leadership team with its own governance framework having been appointed.
A $4.3-billion investment to expand the life of the Klipspruit colliery by 20 years has also been approved.
Meanwhile, the group on Thursday reported strong financial results, with a 16% year-on-year increase in underlying earnings to $1.3-billion.
The strong results are on the back of stronger commodity prices, and mitigations to relieve inflationary pressure, further supported by record production at Australia Manganese and Mozal Aluminium; a 10% increase in manganese ore production; and a 20% increase in payable nickel production at Cerro Matoso.
South32, meanwhile, expects its group production to rise by 5% in the 2019 financial year.
Illawarra Metallurgical Coal continues to recover from an extended outage at the Appin colliery in the first half of the year, with improved longwall and development performance expected to underpin 6.1-million tonnes of production in the next financial year, as well as an anticipated return to historical rates of more than eight-million tonnes a year from the second half of the 2020 finanical year.
Within its aluminium supply chain, South32 expects another incremental improvement in production as the company continues to test the maximum technical capacity of its smelters.
The manganese operations, in Australia and South Africa, will continue to manage production in line with market demand.
-With additional reporting by Esmarie Swanepoel