The Australian group South32 [JSE: S32], which was unbundled from BHP Billiton in 2015, has sold its 92% stake in South Africa Energy Coal to a group of local investors.
South Africa Energy Coal has four coal mines and three processing plants near eMalahleni and Middelburg in Mpumalanga. South32 owns almost 91% in SAEC, while a B-BBEE consortium owns the rest.
South32 sold its stake to a subsidiary of Seriti, a majority black-owned mining investment firm, and two trusts for employees and communities.
Seriti counts Thebe Investments and Masimong Group among its shareholders, and was established to buy the New Vaal, New Denmark and Kriel mines from Anglo American. It now supplies 24Mtpa of thermal coal to Eskom's Lethabo, Tutuka and Kriel power stations.
Seritie will make an up-front cash payment of R100m, and as part of the deal South32 will receive 49% of the free cash flow generated by the local coal business until March 2024, with the payment capped at a maximum of R1.5bn per year.
"We ran an exhaustive and competitive process and we believe Seriti as an established operator is ideally positioned to unlock the potential of South Africa," said South32 CEO Graham Kerr in a statement.
Seriti CEO Mike Teke said the deal will enable the group to offer further "secured, long term coal supply solutions" to Eskom.