Anglo American (LON:AAL) has officially left the coal sector in South Africa with the sale of its New Largo mine to a group of black-controlled companies.
Seriti Resources Pty Ltd., Coalzar Pty Ltd. and South Africa's Industrial Development are paying Corp. are paying $71 million for the asset, Anglo said in the statement.
Last year, Anglo sold other coal assets that exclusively supplied South Africa's power utility Eskom, including New Vaal, New Denmark and Kriel collieries.The operation, in the eastern province of Mpumalanga, has an estimated 585 million tonnes of coal below ground, most of it earmarked to supply state-owned power utility Eskom Holdings, South Africa's biggest coal buyer and provider of almost all of the nation's power.
The energy giant has said it wants suppliers to be black-controlled, as South Africa pushes companies to boost black involvement in the economy to make up for discrimination during apartheid.
Partly because of that pressure, Anglo has been selling coal assets that exclusively supply to Eskom, including New Vaal, New Denmark and Kriel collieries. Those assets were acquired last year by Seriti, which is led by Mike Teke, chairman of South Africa's Chamber of Mines.
Thanks to the massive assets sale kicked off in 2016, Anglo - which was founded in South Africa in 1917 - came out in good shape from the recent and sharp rout in metal prices that hurt the mining industry since late 2015 until early 2017.
Last year, the company not only posted its first annual net profit in five years, but chief executive Mark Cutifani has also announced there was no need to offload any more assets, even some iron ore, and nickel operations he had previously declared non-core.
Cutifani, however, continued trying to reduce Anglo's exposure to both thermal coal and South Africa, as the country recently approved a new mining charter, which imposes new taxes and ownership requirements.
New Largo's deal is subject to regulatory approval and expected to close in the second half of 2018.