SOUTH32 said the sale of its Illawara Metallurgical Coal operations in Australia would be concluded in early September after announcing today the $1bn deal was unconditional.
This was after conditions precedent required of buyers Global Energy and Resources and M Resources had been satisfied.
Graham Kerr, CEO of South32, said the sale of Illawarra represented “a significant milestone” in shaping the group’s portfolio towards “commodities critical to a low-carbon future”.
“The transaction will simplify our business, strengthen our balance sheet and reduce our capital intensity, unlocking capital to invest in our high-quality development projects in copper and zinc,” he said.
South32 said in June it had sold its Metalloys facility in South Africa’s Gauteng province to Menar Group, a privately-held coal and manganese mining firm. The group sold its South African thermal coal operations to Seriti Resources in 2021.
The consideration for Illawarra includes a deferred cash portion of $250m which is payable in 2030, as well as a contingent price-linked cash consideration of up to $350m. The transactions would be recognised in the group’s financial statements as a non-current other receivable and a non-current other financial asset, respectively.
A 26% slide in South32’s share price was finally arrested on July 25. The selling was largely informed by a half year production update on July 22 that it would write down assets for a total of $818m. South32 said it booked a pre-tax writedown of $554m on the value of its Worsley alumina asset, while the value of its Cerro Matoso nickel project in Colombia was reduced by $264m.
