JSE-listed ArcelorMittal South Africa (AMSA) has reached an agreement to sell its 25% shareholding in Coza Mining, held through subsidiary Oakwood Trading, to Afrimat.
Coza’s principal activities are exploration and prospecting for iron-ore and manganese on three properties in the Northern Cape.
AMSA has on numerous occasions since 2018, indicated to shareholders that a foundational element of its turnaround strategy is to diversify the supply and cost structure of its strategic raw material supply.
This transaction is a contributor to that strategy.
To give effect to this, AMSA has also concluded a supply agreement with Afrimat Demaneng for the supply of direct shipping ore on favourable terms for each party.
Afrimat will also acquire the remaining 75% interest in Coza from other shareholders. It notes in a statement that the purchase consideration for Coza will be R300-million.
The payment to AMSA will amount to about R135.75-million.
Pending the granting of approval by the Mineral Resources and Energy Minister for the disposal of a controlling interest in Coza, Afrimat Demaneng will be appointed by Coza as the mining contractor to conduct the mining at the Coza mines.
As part of its bulk commodities growth strategy, Afrimat has explored numerous opportunities in the Northern Cape with a specific focus of augmenting its existing footprint.
For Afrimat, this transaction presents an opportunity to secure a significant high-quality iron-ore resource close to the current Demaneng operation.
Moreover, it is in close proximity to existing operations to leverage existing resources.
The asset also includes possible manganese resources for further exploration.
It also presents the execution of a product supply agreement for the supply of direct shipping ore to AMSA.