South32 to split off for-sale coal assets

South32 would set up its South African coal assets as a separate business with its own management and board in preparation for the sale within the next six months, president and chief operating officer Mike Fraser said on Tuesday.

He said South32, which was spun out from Billiton in 2015, had received offers for the assets, which it put up for sale in November 2017 as part of a shift away from coal.

“After we made the announcement, there was significant interest already from both listed and unlisted entities,” Fraser said on Tuesday at the African Mining Indaba in Cape Town.

He declined to name the bidders for South 32’s coal assets, but power utility Eskom, the main customer for the coal, requires that any new contracts be signed with suppliers that have a black shareholding of more than 50%.

Fraser said South32 would rather sell its coal business to a black-owned buyer.

“We recognise that this business is much better placed if it is majority black-owned.

“There is no doubt about it. Not just because it meets Eskom’s requirements but also because it’s the right thing to do,” he said.

In January, Anglo American sold the last of its South African domestic coal assets to majority black-owned company Seriti Resources.

Fraser said that South32 remained committed to its existing operations in the country, which include aluminium and manganese. “Our priorities are swinging very much towards base metals,” he said.