ANGLO American recently unveiled details of a plan to demerge its South African thermal coal export assets – to be named Thungela Resources – into which it will inject R2.5bn in cash ahead of its primary listing on the Johannesburg Stock Exchange..
Should the proposed demerger be approved by 75% of Anglo American shareholders, its SA thermal coal assets will be separated from the group and listed separately on the JSE and the London Stock Exchange.
The demerger involves the transfer of Anglo American’s thermal coal operations in SA to Thungela.
This will result in a reduction of capital on the balance sheet equivalent to $1.8 billion (R26.1 billion), part of which will be returned to Anglo American shareholders who will receive shares in a new holding company, Thungela Resources Limited, in the ratio of one Thungela share for every 10 Anglo American shares they hold.
Each Anglo American shareholder will also retain their existing shareholding in Anglo American.
Thungela will hold 90% of the thermal coal operations in South Africa with the remaining 10% held collectively by an employee partnership plan and a community partnership plan.
Following the Demerger, Thungela will have beneficial ownership of the thermal coal assets previously owned by Anglo American in, primarily: Goedehoop, Greenside, Isibonelo, Khwezela, Anglo American Inyosi Coal Proprietary Limited (operating the Zibulo colliery), Mafube Coal Mining Proprietary Limited (operating the Mafube colliery) and Butsanani Energy Investment Proprietary Limited (operating the Rietvlei colliery).
The group’s operations are among the highest quality thermal coal mines in South Africa by calorific value.
It also holds a 50% interest in Phola, which owns and operates the Phola Coal Processing Plant, and has a 23.22% interest in Richards Bay Coal Terminal Proprietary Limited. Thermal coal exports accounted for 79.4% of revenue in the 2020 financial year.
In the 2020 financial year, the mines produced 16 463 kt of thermal coal to export markets and 14 015 kt to the domestic market in SA, generating aggregated sales volume (including coal acquired from third parties) of 18 153 kt for exports and 13 362 kt domestically (representing 20.6% of total revenue).
Also to be transferred to Thungela are operating assets and liabilities previously housed under Anglo Operations Proprietary Limited, as well as the entire issued share capital of South Africa Coal Operations Proprietary Limited (Saco).
Anglo says it is committed to supporting Thungela as a standalone business in a variety of ways: an initial cash injection of R2.5 billion (and further contingent capital support in the event thermal coal prices in SA drop below a predetermined threshold), and support from Anglo’s marketing business for a period of three years, with a further six-month transitional period thereafter.
Main Image: Thungela.com