Anglo American has formed a new South African coal group, Anglo Inyosi Coal, worth R7-billion and 27% owned by black investors, the mining group said on Thursday.
Anglo said the new company will incorporate selected key coal projects in South Africa, as well as the Kriel colliery, and have a 4,1-billion tonne coal resource base with an estimated annual production of 48,5-million tonnes.
The deal is in line with the government’s black economic empowerment (BEE) policy aimed at giving black South Africans, disadvantaged under apartheid, a bigger stake in Africa’s economic powerhouse.
Under South Africa’s Mining Charter, firms must meet a range of requirements to renew their mining licences, including minimum equity ownership by black people, higher numbers of black people in management and improved conditions for mining communities.
The transaction is one of the biggest BEE deals so far this year.
Anglo American said newly formed BEE group Inyosi would take a stake in the new coal group under the terms of the deal, creating a leading South African coal group.
Inyosi is led by the Lithemba Consortium and Pamodzi Coal and includes WDB Investment Holdings, an investment firm run by women.
About 27 000 people, many of them women in impoverished communities, will benefit from the deal, according to Inyosi’s stakeholders.
It will be funded through a R25-million equity contribution from Inyosi and a R68-million contribution from Anglo Capital South Africa. Anglo will then subscribe for about R6,9-billion-worth of preference shares in the new firm.
”The funding is well within the norms of BEE transactions and not material to the Anglo group’s earnings,” Philip Baum, acting chief executive of Anglo American South Africa., said in a press conference in Cape Town.
Anglo American, which will provide financing for the development of the coal projects, said the formation of the new group was a key component of the growth strategy of its coal business. — Reuters