Exxaro Resources has agreed to buy Total’s South African coal unit, the fifth-largest producer in the country, to gain expanded reserves and rights at the main export harbour for the fuel.
Exxaro would acquire 100 percent of Total Coal South Africa (TCSA) and settle all outstanding loan claims, the company said yesterday.
The $472 million (R4.9 billion) cost of the deal includes the purchase of all the shares from French oil firm Total and the settlement of an $85.5m loan from Total Finance.
The transaction includes TCSA’s export rights at the Richards Bay coal terminal. For Total, the deal is the latest in a series of disposals as France’s largest oil company focuses on core activities.
By the end of May, Total had sold about $16bn of assets under a programme that started in 2012.
TCSA controls the Dorsfontein and Forzando mines in Mpumalanga, with sales of about 4.5 million tons last year, according to the statement. Most of the output is exported, mainly to India and China.
Exxaro operates seven mines that produce almost 40 million tons a year. Its largest customer is Eskom, which relies on the fuel for 85 percent of its power generation and is struggling to meet demand.
Exxaro said last month it had approved a new R3.8bn mine, the Belfast Project, that would produce coal for export and to supply one of Eskom’s plants.
The fourth-largest exporter of coal from South Africa will gain an additional 4.1 million tons of primary phase entitlements at Richards Bay.
“Exxaro currently leases entitlement from other operators in the industry in order to meet its export requirements.”
Exxaro rose 1.95 percent to close at R144.01. – Bloomberg