Johannesburg - Anglo American has agreed to sell its New Largo coal project in South Africa to a group of black-controlled companies, bringing it closer to an exit from operations designed to supply coal to the country’s power plants.
Anglo will sell New Largo to Seriti Resources, Coalzar, and South Africa’s Industrial Development Corporation for R850m million the company said in a statement Monday.
State-owned power utility Eskom, South Africa’s biggest coal buyer and supplier of almost all of the nation’s power, has said it wants suppliers to be black-controlled, as South Africa pushes companies to boost black involvement in the economy to make up for discrimination during apartheid.
New Largo has about 585 million tons of coal resources and is located in South Africa’s eastern Mpumalanga province, near Eskom’s Kusile power plant, which will be the utility’s biggest at 4 800 megawatts once it’s completed.
The sale of the project will help complete Anglo’s exit from operations that sell coal locally.
The miner announced a sweeping asset-sale program in February 2016 following a plunge in commodity prices, and outlined plans to focus on diamonds, platinum and copper. It’s since scaled back some divestment plans after prices rebounded.
“The sale delivers on our long-standing strategy to exit our Eskom-tied coal assets,” said Norman Mbazima, deputy chairman of Anglo American South Africa.
Seriti, which agreed last year to buy thermal coal mines in South Africa from Anglo, is led by Mike Teke, the former president of the South African Chamber of Mines and ex-chairman of the Richards Bay Coal Terminal.
The transaction is subject to conditions including regulatory approvals in South Africa and is expected to close in the second half of 2018.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER