Anglo American closes New Largo coal project sale in South Africa

3 August 2018 (Last Updated August 3rd, 2018 11:42)

Multinational mining company Anglo American, via its subsidiary, has completed the divestment of the New Largo coal project in South Africa.

Multinational mining company Anglo American, via its subsidiary, has completed the divestment of the New Largo coal project in South Africa.

The transaction covers the sale of Anglo American Inyosi Coal’s interest in the New Largo thermal coal project and the Old New Largo closed colliery, known collectively as New Largo, to the New Largo Coal Proprietary, which is owned by Seriti Resources and Coalzar.

Seriti and Coalzar are majority owned by historically disadvantaged South Africans (HDSAs) and the Industrial Development Corporation SOC (IDC).

"Seriti, Coalzar and the IDC together have excellent operating and management capabilities to develop and operate New Largo optimally and sustainably into the future."

The R850m ($65m) deal was originally announced in January.

Anglo American South Africa deputy chairman Norman Mbazima said: “I am delighted to announce the completion of the sale of New Largo to a majority black-owned-and-managed company.

“As we said upon announcing the sale in January, Seriti, Coalzar and the IDC together have excellent operating and management capabilities to develop and operate New Largo optimally and sustainably into the future.

“This sale marks the completion of our long-standing strategy to exit our Eskom-tied coal assets and is yet another milestone in the sustainable transformation of the South African mining industry.”

The project’s principal asset is its approximately 585 million tonnes (Mt) coal resource, which the company claims is well positioned to supply Eskom’s new Kusile power station.

Anglo American reportedly generated underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $4.6bn within the first six months of this year, as well as $1.6bn of attributable free cash flow.

The company also reduced its net debt to $4bn, representing an 11% reduction since the end of 2017.