Seriti Resources has acquired South African Energy Coal (SAEC) from an Australian mining company South32, the company said.
According to a statement from the company, Sereti will own 91.835% shareholding of South Africa Energy Coal (SAEC) with the remaining 8.165% interest held by a black economic empowerment consortium led by the Phembani Group.
“The purchase price includes an up-front cash payment of approximately R100 million. 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,” the company said.
Conditions of the transaction
- Approval from South African and certain foreign competition authorities;
- Approval from the Minister of Minerals and Energy (DMRE) in terms of Section 11 of the Mineral and Petroleum Resources Development Act;
- Approval from Richards Bay Coal Terminal;
- Consent from Eskom for the change of control of SAEC and agreement in relation to the Duvha Coal Supply Agreement between Eskom and SAEC; and
- Confirmation from the DMRE that it will accept the substitution of rehabilitation guarantees provided by South32 with rehabilitation guarantees provided by Seriti.
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Subject to the conditions being satisfied, the transaction would be expected to close in nine to twelve months.
Mike Teke, Chief Executive Officer at Seriti said, “Finalisation of this transaction will be a significant milestone for Seriti in our ambition to become a black-owned and controlled mining champion.
“The South Africa Energy Coal acquisition will enable us to offer further secured, long-term coal supply solutions to Eskom as a demonstrable commitment to sustainably 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 participation of the SAEC employees and communities in this acquisition.”
Graham Kerr, Chief Executive of South32: “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 safely and sustainably into the future for the benefit of its employees, customers and local communities, consistent with South Africa’s transformation agenda,” Kerr concludes.