Seriti, which is majority owned by historically disadvantage South African is believed to be considering a payment of R2.3billion for the assets, which will result in the company becoming the second largest provider of thermal coal to Eskom, supplying almost a quarter of Eskom’s current annual coal requirements.
Under the terms of the transaction, the consideration payable will be adjusted for cash flows generated by the coal operations, which consist of the New Vaal, New Denmark and Kriel collieries, as well as four closed collieries. Only when the transaction is completed, will the final payment by Seriti be made.
“We are pleased to have agreed the sale of our Eskom-tied domestic thermal coal operations in South Africa,” said Mark Cutifani, Chief Executive of Anglo American, in a statement.
“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.”
Norman Mbazima, Deputy Chairman of Anglo American South Africa, added “We 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.”
The transaction excluded Anglo’s New Largo, a project deemed central to supplying coal to Eskom’s Kusile power station currently under construction.
“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,.” noted Mike Teke, Chief Executive of Seriti.
“Our 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 transaction represents a significant step-forward in Seriti’s vision to become a black-controlled, broad based South African mining champion, and a coal player of significant size and scale.
Seriti Resources is a 79% black-owned consortium consisting of Teke’s Masimong Group Holdings, Thebe Investment Corporation, Zungu Investments Company (Zico), which is led by Sandile Zungu, and Community Investment Holdings Projects.
The transaction is expected to close by the end of 2017.