South32 sells off major South African coal asset for minimal price
Australian business becomes the latest large miner to divest from fossil fuel
Australian miner South32 is to sell its South African thermal coal business for a knockdown price in a further sign of the much maligned fossil fuel’s growing unpopularity.
South32 will sell its South Africa Energy Coal (SAEC) business to local operator Seriti Resources for a minimal upfront payment of $6.75 million (£5.25 million), and 49 per cent of cash generated by the business until 2024.
South32 CEO Graham Kerr said: “For South32, this marks an important milestone as we continue to reshape our portfolio. Completion of this transaction will substantially reduce our capital intensity, strengthen our balance sheet and improve the Group’s operating margin.”
The company is by no means the first large miner to divest from coal, with pressure from investors and environmental concerns putting pressure on businesses to limit their exposure to fossil fuels. Rio Tinto sold off its final coal asset last year, while Anglo American and BHP are both exploring ways to rid themselves of their remaining coal mines.
Nevertheless, Seriti sees the acquisition as a way to meet South Africa’s continuing need for coal, which accounts for around 85 per cent of the nation’s electricity generation. Most of SAEC’s coal is sold to state utility company Eskom.
Seriti chief executive Mike Teke said the purchase of SAEC “will enable us to offer further secured, long term coal supply solutions to Eskom as a demonstrable commitment to sustainably support South Africa’s energy needs.”