Seriti acquires South32’s South African energy coal assets

Seriti Resources is set to acquire a majority stake in the South African Energy Coal (SAEC) business which is owned by diversified miner South32. The deal will give Seriti Resources a 91.835% stake in SAEC after making an upfront payment of R100 million to South32. Additionally, going forward,49% of free cashflow generated by SAEC from transaction date to March 2024 will be given to South32. “The free cashflow payout will be limited to R1.5 billion per year”, Seriti CEO Mike Teke has asserted.

The deal comes after Sereti Resources, with the assistance of Standard  Bank acquired seven Anglo American’s Eskom-supplying coal assets worth R2.3 billion in March 2018. The Anglo deal resulted in the transfer of almost a quarter of Eskom’s coal supply from an established global major to an emerging South African resources champion.

Seriti Resources is an 84% black owned South African mining group. 100% of Seriti’s shareholding is held between Masimong Group, Thebe Investment Corporation, Zungu Investments and Community Investment Holdings. At the conclusion of this deal, Seriti Resources will be South Africa’s second largest coal producer.

“The 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”, Seriti CEO Mike Teke was quoted by the Mining Weekly. The company is hoping to enjoy economies of scale from the mixture of its energy coal businesses, in the process creating operational efficiencies that will deliver competitive energy solutions. For South32, the strategic disposal of its stake in SAEC is informed by the need to operate sustainably into the future for the benefit of its stakeholders in line with the country’s transformation agenda.

According to GlobalData, South32 is a global mining company based in Australia. With a net income of US$1.3 billion and over US$7.5 billion in revenues achieved in 2018, South32 operates coal mines across the world and is involved in 16 projects in South Africa.

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