Johannesburg - Anglo American has received bids for its New
Largo project in South Africa, as the company continues efforts to exit
operations in the country that supply coal to local power plants, according to
two people familiar with the process.
Seriti Resources Holdings Ltd., which agreed last month to
buy thermal coal mines from Anglo American for about 2.3 billion rand ($174
million), is among the bidders for New Largo, said the people, who asked not to
be identified because the talks are private. MTN Group Chairman Phuthuma
Nhleko’s Phembani Group also bid, as did Sipho Maseko and Jabu Mabuza, the
chief executive officer and chairman of Telkom SA SOC Ltd., the people said.
The bids are in the range of about 1 billion rand, according
to one of the people. The new owners will need to make significant investment
to develop the mine, the other person said, without being more specific.
The sale of New Largo would help complete Anglo’s exit from
operations that provide coal to state power utility Eskom Holdings SOC Ltd,
although the companies have yet to sign a supply agreement for the project. The
miner announced a sweeping asset-sale program in February 2016 following a
plunge in commodity prices, and outlined plans to focus on diamonds, platinum
and copper. It’s since scaled back some divestment plans after prices
rebounded.
Anglo American continues to progress the potential sale of
its interests in the New Largo project, the company said in an emailed response
to questions. It declined to comment on specific bidders, citing
confidentiality restraints.
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Eskom, South Africa’s top coal buyer, has said it wants
suppliers to be black-controlled, as South Africa pushes companies to boost
black involvement in the economy to make up for discrimination during
apartheid.
New Largo is located in South Africa’s eastern Mpumalanga
province, near Eskom’s Kusile power plant, which will be the utility’s biggest
at 4,800 megawatts once it’s completed. Anglo considered selling New Largo
together with the mines bought by Seriti, which supply Eskom, but separated the
project in an attempt to get a better price, according to one of the people.
The sale process is expected to take another three to four
months, one of the people said.
BLOOMBERG