SERITI Resources, the consortium that is concluding the purchase of Eskom-dedicated coal mines from Anglo American, is set to add to its asset base with an agreement to buy the New Largo project – a development that could see Seriti go public depending on its capital requirements.
According to the last published estimates on the project, New Largo would provide 15 million tonnes a year (Mtpy) to Eskom, primarily to its Kusile power station which is currently under construction. However, the capital required to build the mine is estimated at R20bn.
The project is currently owned by Anglo and its empowerment partner, but the group decided to exit domestic coal productions, partly because Eskom has been asking new suppliers of coal to sell control to black partners, a situation that would lower the attractiveness of low margin, cost plus mines which New Largo may become.
If this transaction materialised, Anglo will have completely exited all domestic coal mine production.
Mike Teke, a member of the Seriti Resources consortium through his Masimong Group Holdings, and it’s CEO, said he did not comment on market speculation. Seriti had not yet concluded the R2.3bn acquisition of the New Vaal, New Denmark and Kriel mines which supply about 24Mtpy to Eskom power stations on a cost plus basis.
Adding New Largo to this mix would, when the project is complete, make Seriti the largest supplier of coal to Eskom. In addition to Teke, the Seriti consortium also includes Thebe Investment Corporation, Zungu Investments Company, led by Sandile Zungu, and Anna Mokogong’s Community Investments Company.