[miningmx.com] – SIBANYE Gold would consider bidding for the coal assets of Anglo American, said the gold firm’s CEO, Neal Froneman.
In an interview with Miningmx, Froneman said that Anglo’s domestic coal production was the type of coal business into which it could expand its footprint in South Africa’s energy industry.
Sibanye is currently conducting a due diligence over Waterberg Coal Company (WCC), a coal development firm that is building the Waterberg Coal Project in South Africa’s Limpopo province.
“I think if we get into the coal business at Waterberg it would be silly to just own Waterberg,” said Froneman.
“There are so many other coal opportunities. I suppose ultimately the vision of filling the voids left by BHP Billiton and Anglo American exiting South Africa is part of what we see,” he said.
Asked if Sibanye would therefore be interested in bidding for Anglo American’s coal mines, Froneman said: “Yes, absolutely. That is the type of businesses we’re looking for.
“We’ve got to a point where buying single assets is very difficult because it’s as much work as buying a Rustenburg or an Aquarius. So we’ve got to look to things that are going to make a material difference, a positive difference to our business,” he said. “So buying those types of businesses are certainly in our thoughts.”
Anglo American said in February that it may sell its South African domestic coal mines in a move that CEO, Mark Cutifani, said was partly a response to government demands that new coal mines have a black-owned partner with more than 50% of the business.
“We have outlined our proposals to divest of part of our domestic supply,” he said. “We are responding to both the government requirements to have more than 50% in local hands and, from our point of view, the domestic supply has been a good business, but it is not major in the portfolio,” he said.
Anglo mined 36.6 million tonnes of coal in its 2014 financial year of which about 59% was supplied to Eskom. Its Kriel, New Denmark and New Vaal mines are Eskom dedicated operations.
Asked if sale discussions had taken place between Anglo American and Sibanye Gold, Anglo external communication manager, Shamiela Letsoalo, said: “We are in the process of evaluating our coal portfolio.
“And as part of the process, we are engaging key stakeholders like government and Eskom in order to develop a solution that secures investment in the domestic coal assets and accordingly a sustainable coal supply to Eskom”.
Sibanye Gold recently announced plans to buy the Rustenburg platinum mines of Anglo American Platinum, which is 80% owned by Anglo American, for an initial price of R4.5bn ($320m), as well as R4bn ($280m) for Aquarius Platinum. The bid for WCC was made between those transactions and was aimed at reducing Sibanye’s reliance on expensive and sometimes unreliable Eskom power.
Stage three load-shedding by Eskom, in which customers are required to throttle back power some 20% of capacity, had cost Sibanye 270kg in lost gold production, equal to R125m ($9.37m), in revenue during the firm’s second quarter reporting period.
Froneman said at the time that electricity costs were likely to become a quarter of the group’s total costs from about a fifth currently and he therefore was seeking means of becoming self-sufficient for energy supply in joint venture with an independent power producer (IPP).
