Anglo American has announced the sale of its Eskom-tied domestic thermal coal operations in South Africa to a wholly owned subsidiary of Seriti Resources Holdings.
Under the deal, the consideration payable for the properties as of 1 January this year is ZAR2.3bn (approximately $164m).
The amount payable will be adjusted for cash-flows generated by the operations between 1 January and the date the transaction is completed, which will determine the final consideration to be made by Seriti.
Anglo American chief executive Mark Cutifani said: “We are pleased to have agreed the sale of our Eskom-tied domestic thermal coal operations in South Africa.
“This transaction forms part of our ongoing 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.”
The Eskom-tied domestic thermal coal operations include New Vaal, New Denmark and Kriel collieries and four additional closed collieries.
Following the deal, Seriti will become the second largest provider of thermal coal to Eskom, supplying nearly 25% of Eskom’s current annual coal requirements.
Seriti chief executive Mike Teke said: “Seriti is excited about the Transaction which 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."
The transaction is subject to multiple closing conditions, including regulatory approvals in South Africa and Eskom’s approval for transfer to Seriti of the coal supply agreements. It is expected to close by the end of this year.