South32 CEO Graham Kerr
PERTH (miningweekly.com) – Diversified miner South32 on Wednesday entered into a binding conditional agreement to sell its South African energy coal assets to Seriti Resources Holdings for an upfront cash payment of R100-million.
The purchase price also includes a deferred consideration component where South32 would receive 49% of the free cash flow generated from the energy coal assets for a period starting at the date of completion of the transaction, until March 2024, with the payment to be capped at a maximum of R1.5-billion.
South32 CEO Graham Kerr told shareholders that the company had run an exhaustive and competitive process for the sale of the energy coal assets, and believed that Seriti, as an established operator, was ideally placed to unlock the potential from the existing domestic and export operations.
“The sale of our interest in South Africa Energy Coal will enable the business to continue to operate safely and sustainably into the future for the benefit of its employees, customers and local communities, consistent with South Africa’s transformation agenda,” Kerr said.
“For South32, this marks an important milestone as we continue to reshape our portfolio. Completion of this transaction will substantially reduce our capital intensity, strengthen our balance sheet and will improve the group’s operating margin.”
“Finalisation of this transaction will be a significant milestone for Seriti in our ambition to become a black-owned and controlled mining champion.
“The SAEC acquisition will enable us to offer further secured, long-term coal supply solutions to Eskom as a demonstrable commitment to sustainably supporting South Africa’s energy needs. The combination of our energy coal businesses will realise further operational and technical efficiencies enabling us to better service our customers by offering competitive energy solutions," said Seriti CEO Mike Teke.
The transaction is subject to a number of conditions, including regulatory and Ministerial approval, consent from power producer Eskom and approval from the Richards Bay Coal Terminal.