ANGLO American chose to demerge its South African coal assets because it did not have the right to shut production, said its CEO, Mark Cutifani.
“We are cognisant that the Government of South Africa, or whatever jurisdiction you’re in … they are the ultimate owner of the resources, so we don’t have the right to stop production,” he said.
“And to be fair to the South African government, they’ve been quite progressive in last four months in co-operating in this initiative,” he added.
Cutifani was responding to questions following its presentation of its sustainability report on Monday in which it was asked whether demerging the coal assets represented a “kop out” of its commitment to reducing its carbon footprint.
Anglo American announced on April 8 that it would inject R2.5bn to support Thungela Resources, a holding company for its 16.5 million tons a year portfolio of South African coal mines. Thungela Resources would be primarily listed in Johannesburg and have a standard listing on the London Stock Exchange.
The company would begin trading on June 7 assuming Anglo shareholders approved the transaction at its annual general meeting to be held on May 5.
Cutifani also disclosed that selling the company to a black economic empowerment (BEE) partner was less preferred this time around. “Even if we had a BEE entity, they generally come with debt which, in our view, puts more pressure on people not to do all the right things,” he said.
“We thought that a demerger of the business into a structure without debt; where we know the team is wedded to the highest standards of operation; and that it is committed to the needs of the community was the right thing to do,” he said.
Anglo American sold its domestic coal business in South Africa to Seriti Resources in 2017 for about R2.4bn.
Anglo said it hoped to achieve zero emissions by 2040 and has been trying to shift its portfolio towards late-cycle commodities such as fertilisers and diamonds, as well as minerals crucial to decarbonisation, such as copper and nickel.