Plan to unbundle thermal coal division is on track, reassures South32
South32’s plan to unbundle its South African thermal coal division into a separate JSE-listed company is on track, it said in its December quarter production update released on Wednesday morning.
"We are also actively reshaping our portfolio, with SA Energy Coal to be managed as a standalone business from April. This strategic initiative will significantly simplify our organisation and unlock additional value for shareholders," CEO Graham Kerr said in the statement.
The resources group, which was spun-off from BHP in May 2015, announced in November that it intended to turn the division it calls SA Energy Coal (SAEC) into a standalone business.
"Once SAEC has been established as a standalone business and consistent with our objective to further transform our South African operations, we will commence a process to broaden ownership of SAEC. This will present opportunities for broad-based black economic empowerment entities, employees and communities, and could lead to a listing of SAEC on the JSE," South32 said in November.
SAEC’s saleable coal production fell 9% to 13.4-million tonnes during the six months to end-December from 14.8-million tonnes in the matching period in 2016.
Domestic sales suffered from Eskom’s Duvha power station buying less coal.
"Export coal production exceeded expectations as productivity lifted at both the Klipspruit mine and the export orientated areas of the Wolvekrans-Middelburg complex," the production report said.
South32 was committed to investing R4.3bn to extend the life of the Klipspruit colliery by at least 20 years, the production update said.
Highlights of the quarter included the group’s South African manganese mines achieving record production in the December quarter following the successful commissioning of the Wessels central block in the March quarter.