Anglo Coal gets out of Venezuela

Brendan Ryan | Fri, 29 Jan 2010 10:37
[miningmx.com] -- ANGLO American is selling off its coal interests in Canada and Venezuela in a further restructuring of subsidiary Anglo American Coal (Anglo Coal).

Anglo Coal holds a 25.5% stake in Carbones de Guasare (C del G) which operates the Paso Diablo coal mine in Venezuela just across the border from the much larger Carbones del Cerrejon (C del C) operation in neighbouring Columbia in which Anglo Coal has a 33% stake.

Anglo Coal also has a 74.5% stake in Peace River Coal which operates the Trend mine in north-east British Columbia and which exports metallurgical coal to customers in the Pacific and Atlantic regions.

In October last year Anglo Coal was radically restructured. Anglo Coal CEO Ian Cockerill was summarily retrenched and the group split into two “business commodity units”.

These are metallurgical coal headquartered in Australia and run by divisional CEO Seamus French and thermal coal headquartered in South Africa and run by CEO Norman Mbazima.

The restructuring has been widely viewed as a downgrading of the Anglo Coal business which, under Cockerill, was looking to develop into a broader-based energy group.

Anglo American spokesman Pranill Ramchander today confirmed Anglo’s intention to sell out of its Venezuelan and Canadian coal operations.

He commented, “these interests are to be sold as part of a normal review of our coal portfolio.”

The major shareholder in C del G is Venezuelan state mining company Carbozulia holding 49%. The other minority partner with Anglo Coal is US coal group Peabody which also owns 25.5%.

C del G produces thermal coal which is sold to European customers and Anglo’s share of the mine’s production during its 2008 financial year was 1mt.

Peace River Coal’s mine produced 772,400t in 2008 of which 140,000t was thermal and 632,300t was metallurgical coal.

Anglo Coal’s total coal production in 2008 was 99.5mt.

A coal industry source commented, “I don’t understand why they are selling out of Venezuela. It’s a smallish operation but it produces good coal, it’s profitable and it is strategically located next to Cerrejon. "They will probably end up selling that stake to Peabody for next to nothing.”

While the Venezuelan mining sector has been under pressure and threat of nationalisation over the past 18 months the state already owns half of C del G.

Venezuela’s gold mining sector in particular has been targeted by socialist president Hugo Chavez who is trying to force the sale of certain privately owned gold deposits at bargain rates to a state-backed mining company.