Johannesburg - Sibanye Gold is interested in buying Anglo American’s coal assets in South Africa as part of its plan to reduce reliance on state-run electricity supplier Eskom Holdings and cut power costs.
“They are the type of assets we would consider in line with our move into the energy space,” James Wellsted, senior VP of corporate affairs, said by e-mail Thursday. "We are looking at value-accretive growth in South Africa, as long as it supports our dividend strategy and our overall creation of value strategy for all stakeholders."
Power costs in South Africa have almost quadrupled since 2007 as Eskom struggles to build plants, fix old ones and supply the country with enough electricity after more than a decade of underinvestment.
Sibanye said in September it’s conducting due diligence on Waterberg Coal Group, which has a resource of 3.4 billion metric tons that could help supply the miner with cheap, reliable electricity.
Anglo American is seeking to reduce its shareholding in its coal assets that supply Eskom.
"We are engaging key stakeholders like the government and Eskom in order to develop a solution that secures investment in the domestic coal assets, and accordingly a sustainable coal supply to Eskom," Anglo American said in an e-mailed statement.
Wellsted couldn’t confirm whether or not Sibanye was part of any sale process. "As our CEO Neal Froneman has said, they might complement our energy strategy," he said. “They’re scalable, they’re in South Africa and if there’s an opportunity to realise additional value then they’re something we should consider."
Sibanye agreed to pay at least $331 million for some of Anglo American’s platinum assets in South Africa in September and $294 million for Aquarius Platinum the following month.
-With assistance from Paul Burkhardt in Johannesburg.
BLOOMBERG