AngloAmerican said it will sell its Eskom-linked thermal coal operations in South Africa for $166 million.
The company issued a statement this morning that the transaction will be marking an important step in the mining giant’s strategic overhaul to sharpen its focus on three commodities.
The mines, along with four closed collieries, have a supply agreement with Eskom, under which South Africa’s sole power utility paid for their running costs in exchange for guaranteed coal supply at a pre-set price.
AngloAmerican also said it will sell the assets — New Vaal, New Denmark and Kriel collieries — to Seriti Resources Holdings, which is led by Mike Teke, president of the Chamber of Mines industry lobby group.
The decision to trim down its assets is was necessitated by the crash in commodity prices which began in 2015. The company plans to further focus on diamonds, platinum and copper.
Hit hard by a slump in commodity prices in 2015, Anglo launched a sweeping overhaul to slim down its portfolio and .
“This transaction forms part of our ongoing commitment to reshape and upgrade our global asset portfolio,” Chief Executive Mark Cutifani said in a statement.
The deal is subject to regulatory approval and consent from Eskom for the transfer of the coal supply agreement and is expected to close by year-end.
Teke, a school teacher by profession, said the transaction was an important milestone in Seriti Resources’ efforts to become a “black-owned South African mining champion”.
Seriti, which is under 79 percent-owned black ownership, has also expressed interest in buying Anglo’s New Largo project. The mine is under development to supply Eskom’s new Kusile power plant over a 47-year period, Teke said.
“We are interested in building a massive mining company in this country. The story doesn’t end here with these assets and if there’s an opportunity that comes beyond this, and Anglo is selling, we will explore that possibility,” he said.