Anglo neutral on bidders for SA coal mines

[miningmx.com] – ANGLO American would not make judgements about bidders for its thermal coal assets in South Africa provided the process of divestment was transparent and made commercial sense, said Mark Cutifani, the UK group’s CEO.

“We won’t make judgements on the bidders on whether they are favoured or not favoured,’ Cutifani said an interview on February 16 following the group’s full-year results presentation. “We are not politicians.”

“We will take into account the bona fides of the bidders,” he said, adding that the empowerment credentials and an appropriate social and labour plan of companies bidding for any of its coal assets in South Africa also had to pass muster.

In its presentation, Anglo American announced it would add its export coal mines in South Africa to domestic mines that it wanted to sell. This was in terms of a broad sweep of non-core assets aimed at reducing net debt to $6bn in the medium-term.

On February 23, South Africa’s Competition Tribunal approved the R2.15bn takeover of Optimum Coal Mine by Tegeta Exploration and Resources provided the deal did not involve retrenchment of some 3,000 employees.

The sale of the asset, out of business rescue proceedings, was controversial because Tegeta is owned by Mabengela Investments and Oakbay Investments, the holding company for the Gupta family’s businesses.

Criticism of the Guptas has escalated in recent months because their influence over President Jacob Zuma, described by political analyst, Nic Borain, in an interview with Bloomberg News as tantamount to “the capture of political authority by a group of foreign businessmen”.

Anglo announced plans to sell its domestic coal mines 12 months ago, but the proposed sale of its export mines is still fresh.

“A lot of work has been done on the domestic [coal] mines but with the export [coal] mines we are still putting together the data,” Cutifani said. “In the next couple of months we will see where we land and what the final bid should look like,” he said.

Asked if the concentration of ownership of coal mining in South Africa would be diluted as a result of the disposal process, Cutifani said: “The concentration and competition issues still need to be flagged. I’m not sure what the final balance will be”.

Anglo supplies Eskom some 21.5 million tonnes a year (mtpa) of coal from its South African mines whilst its export production made up the balance of 50.3 mtpa in total production during the UK-listed group’s 2015 financial year.