JOHANNESBURG – South32 has confirmed that it was looking for new owners of local thermal coal assets after embarking on the process of widening the ownership of the business in the September 2018 quarter as reports emerged that Exxaro, Seriti Resources and non-profit organisation Mining Forum of South Africa had made a bid for the operations.
A South32 spokesperson, who declined to be named, said yesterday that the company had received several unsolicited expressions of interest and would start to engage with those who had shown an interest in the business.
“We have retained Morgan Stanley and Macquarie to advise on the sale process and the likely timing will be somewhere in the range of 18 to 24 months,” said the spokesperson. “We have now commenced a process to broaden South Africa Energy Coal’s ownership, consistent with our commitment to further transform our South African operations.”
South32 is a JSE, London and Australian-listed mining and metals company, which was spun out of mining giant BHP Billiton in 2015.
The company’s energy-coal business in South Africa has three operating mines, which produced almost 29 million metric tons of the fuel last year.
The planned sale is part of a plan to take thermal coal business forward in line with its commitment to the country’s transformation agenda.
Forum president Blessings Ramoba confirmed that its investment arm was planning to submit a bid for between 30 percent and 50 percent of South32’s thermal assets. “We are promoting the principle of the mining charter and we hope that the outcome of the bid will be favourable to us. We have enough resources for the deal and we want 50 percent of the assets.”
Ramoba said the assets were estimated at between R10 billion and R12bn. “We are busy talking to individuals in and outside of South Africa to ensure that we acquire the assets.” The local thermal coal assets are said to be valued at $800 million (R11.9bn).
Seriti acquired coal mines and a large deposit from Anglo American Plc earlier this year, while South32 began managing the South African thermal business as a standalone to improve competitiveness and ensure ongoing sustainability in April. In November, South32 announced that it had approved a R4.3bn investment of the Klipspruit colliery by at least 20 years.
Ramoba said the forum had previously raised R3.2bn to acquire Lonmin, the world’s third-largest platinum producer.
However, Sibanye Gold, South Africa’s biggest gold producer, was named as the preferred bidder for Lonmin. Sibanye is in the process of a R5bn takeover of Lonmin.
MTN Group chairperson Phuthuma Nhleko’s Phembani Group is also said to be considering an offer.
Exxaro declined to comment, and Seriti was not immediately available for comment.
– BUSINESS REPORT