Anglo agrees to sell 3 coal mines to BEE consortium for R2bn

2017-04-09 19:58

A consortium consisting of four empowerment entities have signed agreements with Anglo American to buy three local coal mines for about R2 billion, sources close to the deal said on Sunday.

The parities would this week, possibly as early as Monday, announce the deal to the public, the sources added.

The four black economic empowerment entities are Sandile Zungu’s Zungu Investments Company or Zico, Community Investment Holdings (CIH), which is led by CIH executive chairperson Anna Mokgokong, Thebe Investment Corporation and Masimong Group, which has Chamber of Mines chairman Mike Teke as its chairman and controlling shareholder, the sources indicated.

Pranill Ramchander, a spokesperson for Anglo American, said on Sunday: “We will make an announcement in due course”.

Teke declined to comment when contacted on Sunday. Zungu was not available when contacted on his cell phone.

Being a Sunday, the offices of Community Investment Holdings and Thebe Investment Corporation were closed and no one answered calls made to either of these companies.

The three AngloCoal mines are open cut coal mine New Vaal, underground coal mine New Demark and open cut and underground coal mine Kriel, the sources said.

The deals are subject to approvals by the Department of Mineral Resources and the competition authorities.

Kriel has estimated proved and probable coal resources of 14.7 million tons, New Denmark has estimated proved and probable coal resources of 102.5 million tons and New Vaal has estimated proved and probable coal resources of 226.9 million tons.

All three coal mines supply Eskom and are based in Mpumalanga.

Matshela Koko, now Eskom’s acting CEO, has pushed for Eskom’s coal suppliers to be at least 50 percent black owned.

In 2016, Kriel produced 6.3 million tons of coal, New Denmark’s output was 2.5 million tons of coal and New Vaal’s 15.9 million tons of coal for total coal output for the year from the three mines of 24.7 millions tons.

AngloCoal owns seven coal mines in South Africa, Goedehoop, Greenside, Kleinkopje, Landau, New Denmark, Isibonela and New Vaal.

AngloCoal also owns a 73% stake in Anglo American Inyosi Coal, the black economic empowerment company created in June 2010.

Anglo American Inyosi Coal owns Kriel, the Zibulo multi-product mine and the New Largo, Elders and Heidelberg coal projects.

The four empowerment entities will be the second largest supplier of coal to Eskom behind Exxaro Resources, which supplied Eskom with almost 30 million tons of coal last year.

Bloomberg last month reported that Phembani Group, founded by MTN Group chairman Phuthuma Nhleko, had also been interested in buying the local AngloCoal mines up for sale.

Royal Bafokeng Holdings was also in the bidding for AngloCoal’s local mines.

However, in an interview in August last year CEO Albertinah Kekana told City Press that Royal Bafokeng was involved in the process to buy Anglo American’s local coal mines, but withdrew.

She declined to give reasons for dropping out.

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March 18 2018