Modern Mining November 2019

Seriti acquires South32’s South African coal assets

Seriti Resources and South32 have con- cluded an acquisition agreement in terms of which Seriti will acquire the latter’s 91,83 % shareholding in South Africa Energy Coal (SAEC). SAEC’s operations are located in the coalfields of Mpumalanga. They include four collieries – Khutala, Klipspruit, Middel­ burg and Wolvekrans – as well as three processing plants, producing energy coal for the domestic and export market. Included on the Seriti side of the transac- tion are two trusts which will acquire equity on behalf of employees and communities. The remaining 8,16 % interest in SAEC is held by a black economic empowerment consortium led by the Phembani Group. The purchase price includes an up-front cash payment of approximately R100 mil- lion. In addition, South32 will receive 49 % of the free cash flow generated by SAEC from the date the transaction is concluded until March 2024. That component will be limited to a maximum of R1,5 billion a year. Subject to a number of conditions being satisfied, the transaction is expected to close in nine to twelve months. Seriti CEO Mike Teke said: “Finalisation of this transaction will be a significant mile- stone for Seriti in our ambition to become a black-owned and controlled mining champion. “The South Africa Energy Coal acquisi- tion will enable us to offer further secured, long-term coal supply solutions to Eskom as a demonstrable commitment to sus-

Seriti CEO Mike Teke (left) and South32 COO Mike Fraser at a media briefing on the transaction.

safely and sustainably into the future for the benefit of its employees, customers and local communities, consistent with South Africa’s transformation agenda.” Seriti is a broad-based, 91 % black- owned and controlled coal mining company. Through its operating subsid- iary, Seriti Coal, it currently operates three large-scale, opencast and underground thermal coal mines – the New Vaal, New Denmark and Kriel mines – which it acquired from Anglo American, as well as various life extension coal resources and closed collieries. Together with its partners, Seriti intends to develop its New Largo project into a large-scale, opencast coal mine capable of providing the base load fuel requirements for Eskom’s Kusile Power Station. 

tainably supporting South Africa’s energy needs. The combination of our energy coal businesses will realise further operational and technical efficiencies enabling us to better service our customers by offering competitive energy solutions. “We remain fully committed to all our stakeholders and we welcome the par- ticipation of the SAEC employees and communities in this acquisition.” South32 CEO Graham Kerr said: “We ran an exhaustive and competitive process and we believe Seriti as an established operator is ideally positioned to unlock the potential of SAEC’s existing domestic and export operations, including its significant untapped resource base. “The sale of our interest in SAEC will enable the business to continue to operate

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