Diversified miner Anglo American plc today said that it has agreed to sell its thermal coal operations in South Africa to a wholly-owned subsidiary of Seriti Resources Holdings Proprietary Ltd (Seriti), a company majority owned by historically disadvantaged South Africans (HDSAs), for $166 million.
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, South Africa's sole power utility, which has paid for the mines running costs in exchange for coal supply at a pre-set price.
Mark Cutifani, CEO of Anglo American, said,: "We are pleased to have agreed 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."
Mike Teke, CEO of Seriti, said, "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. The transaction is subject to 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.
Anglo American had last year said that it would divest assets worth around $4 billion in order to cut net debt to under $10 billion by the end of the year and also focus on copper, platinum and diamonds.
The London-based miner had posted a $5.6-billion full-year loss in 2015 and credit ratings agencies Standard & Poor's, Fitch, and Moody's cut the company's rating to junk in February.
Last year, it exited Brazil by selling its niobium and phosphates assets to China Molybdenum for $1.5 billion in cash and also agreed to sell its 70-per cent stake in the Foxleigh metallurgical coal mine in Queensland, Australia to a consortium led by Taurus Fund Management.