PERTH: South32 Limited has entered into a binding conditional agreement for the sale of 91.835% shareholding in South32 SA Coal Holdings Proprietary Limited (South Africa Energy Coal, SAEC) to a wholly-owned subsidiary of Seriti Resources Holdings Proprietary Limited (Seriti) and two trusts which will acquire and hold equity on behalf of employees and communities.

Subject to a number of material conditions, Seriti will make an up-front cash payment of approximately 100 million South African Rand to acquire South32’s shares in SAEC.

The purchase price also includes a deferred consideration component where South32 will receive 49% of the free cash flow generated by SAEC for a period commencing at the date of completion to March 2024, with payment capped at a maximum of 1.5 billion South African Rand per annum.

South32 Chief Executive Officer, Graham Kerr said, “I am pleased to announce we have entered into an agreement with Seriti, a black-owned and operated South African mining company. 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 Energy Coal’s existing domestic and export operations, including its significant untapped resource base.

“The sale of our interest in South Africa Energy Coal will enable the business to continue to operate safely and sustainably into the future for the benefit of its employees, customers and local communities, consistent with South Africa’s transformation agenda.

“For South32, this marks an important milestone as we continue to reshape our portfolio. Completion of this transaction will substantially reduce our capital intensity, strengthen our balance sheet and will improve the Group’s operating margin.”

Seriti Chief Executive Officer, Mike Teke said, “This acquisition is a significant milestone for Seriti in our ambition to become a black-owned and controlled mining champion. The South Africa Energy Coal acquisition will enable us to offer further secured, long term coal supply solutions to Eskom as a demonstrable commitment to sustainably support South Africa’s energy needs. The combination of our energy coal businesses will realise further operational and technical efficiencies enabling us to better service our customers by offering competitive energy solutions. “We remain fully committed to all of our stakeholders and welcome the participation of the South Africa Energy Coal employees and communities in this acquisition.”