SOUTH Africa’s Department of Mineral Resources (DMR) last month transferred ownership of the Arnot coal mine in Mpumalanga province to Wescoal Holdings paving the way for a landmark transaction as shareholders in the mine include employees.
The mine was shut in 2015 following the failure of Exxaro Resources, the owner, to negotiate a renewal of a coal sales agreement with Eskom, South Africa’s power utility. The transaction allows for the reopening of the mine in which Wescoal will take a 50% stake.
“This partnership is the first of its kind in South Africa as mineworkers will own 50% of Arnot,” said Gwede Mantashe, South African mines minister. “We’d also like to commend Exxaro for seeing this opportunity and making this bold decision,” he said.
Arnot Mine is adjacent to the Arnot Power Station and coal can be delivered to the power station through a conveyer belt, resulting in a cost competitive advantage with minimum carbon tax impact, said Exxaro Resources in a statement.
Wescoal said that Arnot OpCo, the asset-level company in which the employees have their stake, had responded on April 2 to the Eskom Request for Proposal (RFP) to supply coal to the Arnot Power Station.
Completion of the transaction turns on outstanding conditions precedent as well as the approval of South Africa’s competition authorities.
