Anglo American is set to demerge its South African coal assets and transfer them to another company in a bid to leave the resource behind it as the miner steps up its decarbonisation efforts.
Credit: Marlon Trottmann / Shutterstock
The plan will come into effect on May 5, when all its South African coal will be transferred to Thungela Resources, a holding company that will be listed on both the Johannesburg and London stock exchanges.
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There has been a great deal of international pressure for mining companies to move away from coal as government and companies alike set strict climate goals in order to avert the worst of the climate crisis.
Rio Tinto sold its last coal mine in 2018 and is also set to transfer away from iron ore with a series of new investment, such as the Oyu Tolgoi mine in Mongolia.
Each Anglo American shareholder will receive a stake in Thungela, and the miner has allowed the various shareholders to either increase or decrease their interest in the holding company, dependent on their views on thermal coal.
The deal will also allow the company to pursue new deals and begin earning capital separate to its parent company.
The miner's CEO Mark Cutifani said the company had been attempting to transition away from thermal coal for a number of years adding it should "continue to act responsibly" as the world moves towards a low-carbon economy.
He added: "Our proposed demerger of what are precious natural resources for South Africa, allows us to do exactly that. We are confident that Thungela will be a responsible steward of our thermal coal assets in South Africa, benefiting from an experienced and diverse management team and board.
"While representing just a small proportion of Anglo American today, we are laying the foundation for South Africa’s leading coal business, setting it up for success to deliver value for all its stakeholders.
"Looking forward, we believe the prospects for long-term value delivery are greatest as two standalone businesses, each with their own strategy and access to capital.”
Anglo American is looking to prop up Thungela as an independent business and has injected it with $170 million (€143 million) with further payments coming until the end of 2022.
The company's marketing team will continue to support it for a further three years, to be followed by a six-month transitional period.
July Ndlovu, Thungela's CEO said it was going to attempt to operate sustainably going into the future.
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She added: [We will continue to] drive safety health, environmental, governance and social programmes for the benefit of our employees, host communities and shareholders.
"The demerger of Thungela and our listing on the JSE will represent yet another major milestone for Anglo American’s long-running contribution towards transforming South Africa’s mining industry.”
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