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Cape Town – Seriti Resources has agreed to buy Anglo American’s Eskom-tied domestic thermal coal operations for R2.3bn, the mining company said in a statement on Monday.
The transaction will make the company led by Chamber of Mines president Mike Teke the second largest supplier to Eskom, supplying almost a quarter of Eskom’s current annual coal requirements.
Seriti is majority owned by historically disadvantaged South Africans and its directors include Teke, Thebe Energy & Resources CEO Sizwe Mncwango, Sandile Zungu of Zungu Investments and Community Investment chairperson Dr Anna Mokgokong.
Seriti is owned by four anchor stakeholders: Masimong Group, Thebe Investment, Zungu Investments and Community Investment. It was registered with the Companies and Intellectual Property Commission on 28 August 2015.
The amount payable will be adjusted for cash flows generated by the operations between 1 January 2017 and the date when the transaction is completed, Anglo said in a statement on Monday. They expect the sale to be concluded by the end of 2017.
Anglo CEO Mark Cutifani said the transaction forms part of Anglo’s 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".
It comes amid delays of the Mining Charter, which seeks mining companies to have 26% or more black ownership, even if the original empowerment company disposes its shares. It also comes as Anglo embarks on its mission to sell all non-core assets to reduce its reliance on debt.
Anglo deputy chairperson Norman Mbazima said 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”.
Teke said the sale represents a significant step-forward in our vision to become a black-controlled, broad based South African mining champion, and a coal player of significant size and scale.
“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,” he said.
“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 team looks forward to managing and growing the operations going forward, with a focus on ensuring their ongoing sustainability, given their strategic importance.”
The transaction is subject to conditions, including 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.
Seriti is a broad-based mining company “established with the aim of preserving and operating strategic energy assets for the benefit of South Africa and its people”, it explained.
“Seriti’s management team will be led by Mike Teke who has extensive mining experience through the acquisition, operation and development of Optimum Coal Mines and Koornfontein Mines which produced approximately 10Mtpa of saleable domestic and export thermal coal and the development of other large scale thermal coal projects. Seriti intends to provide meaningful equity participation for management, employees and communities in its structure.”
