Diversified miner South32 has pledged to increase its capital management programme by $200m to reach $1.88bn and reduce emissions.
The firm unveiled plans to achieve a 50% reduction in its Scope 1 and 2 operational emissions by 2035.
The announcements follow the approval from South African utility Eskom to South32’s request for the sale of South32 Coal Holdings (South Africa Energy Coal) to Seriti Resources.
South32 is due to complete the transaction with coal miner Seriti Resources on 1 June this year.
South32 CEO Graham Kerr said: “We are sustainably reshaping our business for a low carbon future by increasing our exposure to base metals.
“We have set a new medium-term target to halve our operational emissions by 2035 and are investing in efficiency projects, applying low carbon design principles and evaluating carbon reduction technologies to achieve this goal.”
In November 2019, South32 signed a deal to sell a majority stake in its coal subsidiary to Seriti Resources for an upfront payment of $7.1m (R100m).
The deal consideration also included a deferred payment whereby South32 would receive a portion of the cash flow generated by the unit.
However, last month, South32 said that it would provide $250m in funding to support the divestment of South Africa Energy Coal (SAEC) to Seriti.
This follows an amended share purchase agreement by South32 in March 2021, adjusting the up-front cash payment and removing the deferred consideration mechanism.
Upon completion of the deal, the new shareholders of SAEC will be Seriti Resources (90%), and SAEC Employee and Community Trusts (5% each).
However, according to the coal supply agreement between South32 and Eskom, the South African utility is required to give consent, which is now in place, on the possible change in ownership regarding South32 SA Energy Coal.
South32’s coal unit supplies the majority of the coal requirements for the Eskom-operated Duvha power station in Mpumalanga.