Page 8 - AfrElec Week 14 2021

AfrElec COAL AfrElec

South32 agrees to $200mn clean up coasts

as part of mine sale to Seriti Resources

SOUTH AFRICA SOUTH32 has proposed revised terms for the At the start of September 2020, South Africa’s
sale of its four South African coal mines to Seriti Competition Commission recommended that
Resources, and has agreed to pay $200mn of the Competition Tribunal approve the deal.
clean-up costs at the four sites. Seriti is a 91% black-owned and controlled
The proposed terms of the sale require the South African mining company. It is co-owned
approval by the South African Treasury and by four black anchor shareholders: Masimong
Eskom of changes to the coal supply agreement Group; Thebe Investments; Zungu Investments
for the Duvha power station. (Zico) and Community Investment Holdings
South32 has also agreed to provide a (CIH).
$50mn fund to cover the restructuring costs of Seriti will supply about 30% of the Eskom’s
loss-making mining areas and to act as guaran- 120mn tonnes per year (tpy) annual demand
tor on a $120mn loan for working capital Seriti is once it concludes the SAEC purchase. It had
seeking from a South African commercial bank. previously bought the domestic coal mines of
South32 announced the sale of the business Anglo American.
to Seriti Resources in November 2019. The deal Seriti supplies coal to Eskom’s Tutuka,
will see the Australian miner sell off its last South Lethabo and Kriel power stations and has an
African mines and improve its balance sheet. It upcoming mining project, the New Largo Coal
is also reacting to investor pressure to address Mine, intended to deliver coal to Kusile power
climate change concerns and limit its exposure station. SAEC supplies the Duvha and Kendal
to fossil fuels. power stations from its Khuthala and Ifalethu
South Africa’s anti-trust tribunal in Decem- mines.
ber approved the sale, clearing a key hurdle for In June 2020, Seriti and a consortium backed
sealing the deal. by global energy trader Mercuria were among
However, sealing a coal supply agreement up to six groups that submitted final bids for
with Eskom has delayed the final sale. South32’s South African coal assets.
“There were a number of complex contracts Seriti bought Anglo American’s New Largo
[in SAEC], not least of which is with Eskom and coal assets in 2017 and has said it is on the hunt
the coal sales agreement (CSA) to Duvha. It was for more, including South Africa’s Optimum coal
a difficult contract and it would have been unrea- mine, formerly owned by Glencore.
sonable for Seriti to take it on,” said South32 CEO South32 itself was spun out of BHP in 2015.™
Mike Fraser said in November 2020.

P8 www. NEWSBASE .com Week 14 08•April•2021