SA mines minister throws weight behind Seriti bid for South32 coal mines

Gwede Mantashe, mines and energy minister, South Africa

SOUTH African mines minister, Gwede Mantashe, said he supported a bid for the coal mines of South32 by the Seriti Resources consortium, describing the transaction as a new national mining champion in-the-making.

“I’m not a shareholder in Seriti or South32, but if I can help establish a significant black mining company that is a national champion, they why not?” he said in a media roundtable in Pretoria on September 13.

Said Mantashe: “My dream remains to create a national champion. Why is it an issue that a black-owned business is a major supplier of coal when nothing is said when Glencore and Anglo American supplied all the coal?”

Seriti was selected from an initial bidders list of more than 50 companies for exclusive negotiations with South32 for its 92% stake in South Africa Energy Coal (SAEC), a business unit that produces about 28 million tons a year of coal.

Roughly half of this coal is supplied to Eskom which means that including the coal mines Seriti bought from Anglo American in 2017/18, it will supply about 40% of Eskom’s annual coal burn. South32 said Seriti was ideally positioned to enter into a business relationship with Eskom that would help the utility lower its overall primary energy cost.

However, Seriti Resources has been the subject of criticism.

BusinessLive, one of South Africa’s largest business publications, described the possible sale of SAEC to Seriti Consortium as “a confidence trick”. It added, in an opinion piece, that Eskom did not need SAEC coal given the abundant sources of coal in slurry that existed. According to BusinessLive, reprocessing the slurry would cut Eskom’s coal costs.

Mike Teke, CEO of Seriti Resources, said reprocessing slurry as a sole source of Eskom’s power needs was not yet technically feasible. Discards would result in higher ash content and damage to power station mills, he said.

“The use of fines, whether briquetted or packaged in any manner has been extensively tested and found useful in many environments. So, this story is not new. It is, of course, something that the industry will continue to investigate as part of its efforts to improve efficiencies,” he said.

“But based on available technology, the use of briquetted fines poses significant technical logistical and environmental challenges to coal suppliers and Eskom. Some of these relate to the high moisture content, problems in handling and agglomeration processes, and the actual combustion process itself.

“The best approach for pragmatists is to be complementary in mixing coal and fines to optimise energy generation,” he said.