South32 said it welcomes the decision by the Competition Tribunal to approve the sale of its shareholding in South Africa Energy Coal (SAEC) to Seriti Resources Holdings.
The Competition Tribunal heard evidence from a number of interested parties, including Eskom Holdings before reaching its decision.
The two companies entered into a binding conditional sale agreement last year and it involved an upfront payment of about R100 million to be paid by Seriti to South32.
South32 chief executive Graham Kerr said the approval of the transaction by the Competition Tribunal marks an important step on the path to completing the sale of South Africa Energy Coal. “While the transaction remains subject to material conditions, including approvals from Eskom, we continue to make progress in securing these and remain on-track to close during the March 2021 quarter,” Kerr said.
South32 will receive 49 percent of the cash flow generated by SAEC division under the deal, with payments capped at R1.5 billion a year, starting from the completion of the deal to March 2024.
Seriti chief executive Mike Teke said this is a significant step for Seriti in its strategic journey towards its goal of becoming a South African mining champion.
“The transaction remains strategically compelling for South Africa’s energy security and for Seriti’s desire to participate meaningfully in both the domestic and export coal markets. We are confident that we will be able to make good progress in the final elements of the transaction in the next few months,” Teke said.
South32 share price was down by 1.75 percent to R27.56 on the JSE on Wednesday afternoon.
BUSINESS REPORT