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.