Glencore to sell Optimum Coal Mine in South Africa for $136m

14 December 2015 (Last Updated December 14th, 2015 09:33)

Anglo–Swiss miner Glencore has provisionally agreed to sell its Optimum Coal Mine in South Africa to Tegeta Exploration and Resources for $136m.

Anglo-Swiss miner Glencore has provisionally agreed to sell its optimum coal mine in South Africa to Tegeta Exploration and Resources for $136m.

The deal will save the mine from closure, as well as an expected 500 jobs.

In August, Glencore announced that it was putting Optimum Coal Holdings and Optimum Coal Mine (Optimum) under supervision, given the firm's continued and unsustainable financial hardship.

"Glencore is well placed to continue to be cash generative in the current environment."

The company blamed its unsuccessful deal with Eskom as a reason for the financial strain.

The business was also hit by a slump in commodities prices, forcing the mining and trading company to revamp its global business.

South Africa's business rescue law is reportedly similar to chapter 11 in the US, which allows a financially burdened company to temporarily delay creditors' claims against it or its assets.

Proceeds from the sale of Optimum to South Africa's Tegeta Exploration will be used to pay Optimum's ZAR2.55bn ($160m) debt, and Glencore is expected to pay the balance.

Glencore CEO Ivan Glasenberg said: "In September, we announced a number of measures to reduce our debt.

"Today we show significant delivery on those commitments, with $8.7 billion achieved to date, and are able to announce an increase in our net debt reduction target measures by almost $3 billion to $13 billion.

"Glencore is well placed to continue to be cash generative in the current environment, and at even lower prices. We retain a high degree of flexibility and will continue to review the need to act further as required."