Mining
giant Anglo American plans to exit coal mining in South Africa, in a major
shift away from carbon-intense operations.

The
company has, in the past few years, been offloading its coal assets, which has
included the sale of its Eskom coal mines in 2018, as well as the Drayton mine
in Australia.

In
a response to shareholder questions, the diversified global miner said it would
consider its exit options, with a view to listing the demerged business on the
Johannesburg Stock Exchange.

“We
are therefore working towards a possible demerger of our thermal coal
operations in South Africa as our likely preferred exit option, expected in the
next two to three years, with a primary listing in the JSE for the de-merged
business,” it said.

“We will continue to
consider other exit options as we engage with stakeholders as part of our
commitment to a responsible transition.”

In light of growing concerns over
climate change, the global push for clean energy has seen companies adopt greener
policies, which include measures to reduce C02 emissions.

Anglo American, which operates
diamond iron ore, gold and platinum mines in South Africa, said its thermal
coal operations in the country “constitute a strong and attractive
business with high-quality well-located assets, and with access to established
export infrastructure”.

The mining giant in 2018 sold its
thermal coal mines to a black-owned entity, Seriti
Resources
, in a deal worth R2.3 billion. The mines, including
New Vaal, New Denmark and Kriel collieries, supply coal to Eskom’s power
stations Lethabo, Thuthuka and Kriel.

According to mining and labour
analyst Mamokgethi Molopyane, the decision by the company to let go of the coal
“burden” did not come as a surprise, in the face of a growing need
for clean energy.

Coal still viable

“But that does not mean that
coal in South Africa is not a viable business anymore, given our reliance on
coal for energy generation,” she said.

Molopyane believes Anglo’s exit from
the coal sector is unlikely to cause any overall negative impact to the industry,
as coal still forms a major part of the country’s energy policy, including
exports to other African countries who still rely on coal.

“I don’t think the [coal]
sector would be badly impacted by the decision… at least here at home, and in
other African countries it is still going to be around for some time,” she
said.

Eskom generates most of its
electricity from coal, and the company’s new mega-power stations, Kusile and
Medupi, are coal-fired.

However,
the country has been adding renewable energy sources such as wind and solar as
alternatives. Earlier this week, it was announced that had begun a
public consultation process which will pave the way for municipalities to
directly source their own electricity from independent power producers
.

Anglo American noted that it
believes that the “long term prospects of our thermal coal operations in
the country may be better served under different ownership” given the
shift towards cleaner energy. 

 

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