Bids line up for New Largo

Anglo American has received bids for its New Largo project in South Africa, as the company continues efforts to exit operations in the country that supply coal to local power plants, two sources say.

Seriti Resources Holdings, which agreed last month to buy thermal coal mines from Anglo for R2.3 billion, is among the bidders for New Largo, said the people, who asked not to be identified.

MTN Group chairman Phuthuma Nhleko’s Phembani Group also considered bidding, while separate groups that included Sipho Maseko and Jabu Mabuza have also considered buying Anglo coal assets including a package that previously included New Largo, they said. The two businessmen are the chief executive officer and chairman of Telkom respectively.

The bid was about R1 billion, according to one source. The new owners will need to make significant investment to develop the mine, the other person said. Other potential bidders decided not to do so because of the lack of an existing contract with Eskom.

The sale of New Largo would help complete Anglo’s exit from operations that provide coal to Eskom, although the companies have yet to sign a supply agreement for the project. The miner last year announced an asset-sale programme following a plunge in commodity prices, and outlined plans to focus on diamonds, platinum and copper. It’s since scaled back some divestment plans after prices rebounded.

Anglo American continues to progress the potential sale of its interests in the New Largo project, the company said. It declined to comment on specific bidders, citing confidentiality restraints.

Eskom said it did not expect a contract with New Largo “soon”. Eskom burns coal for 90% of its electricity. – Bloomberg