SOUTH32 was “positively optimistic” it would complete the sale of its South African Energy Coal (SAEC) business to Seriti Resources by year-end, even though it had taken longer than anticipated, said Reuters citing the firm’s COO, Mike Fraser.
The deal, which will increase Seriti’s share of the thermal coal market supplying state power firm Eskom, had to secure approval from South Africa’s mines ministry and competition authorities. South Africa’s Competition Commission last month recommended the Competition Tribunal approve the deal, said Reuters.
Fraser said: “There were a number of complex contracts [in SAEC] not least of which is with Eskom and the coal sales agreement (CSA) to Duvha. It was a difficult contract and it would have been unreasonable for Seriti to take it on”.
South32 has commented in the past about the CSA to Duvha’s power station in Mpumalanga province. The contract is underwater money and was deemed “prejudicial” to the company’s Wolverkrans Middelburg Complex which only makes money if the price of the export portion of its production is high enough.
Seriti will supply about 30% of the Eskom’s 120 million tons a year annual demand once it concludes the SAEC purchase. It had previously bought the domestic coal mines of Anglo American.
Seriti supplies coal to Eskom’s Tutuka, Lethabo and Kriel power stations and has an upcoming mining project, the New Largo Coal Mine, intended to supply coal to Kusile power station. SAEC supplies the Duvha and Kendal power stations from its Khuthala and Ifalethu mines.