Anglo American mulls investor concerns, to spin off coal mines in SA

With coal being one of the key contributors to global carbon emissions, investors in the thermal coal industry have started to raise concerns over the most-polluting fuel. Accelerating its response to investor pressure, global mining company, Anglo American Plc has revealed plans to separate its coal mines in South Africa into a new business under the name Thungela Resources Ltd.

In a statement, the company said that the proposed demerger addresses the views held by its shareholders in relation to thermal coal. The plan provides the possibility to act on such views and to either maintain, decrease or increase shareholder interests in Thungela.

For over a year, Anglo has been seeking to exit from thermal coal and has always considered separating its South African biz as one of the most plausible idea. Apart from South Africa, the company also owns a coal mine in Colombia and coking coal mines in Australia that are dedicated on supporting steel industries rather than the power sector.

It is worth noting that Anglo has already made significant efforts on reducing its production in recent years, which involves cutting its overall output by more than half. Mark Cutifani, CEO of Anglo, had in the past agreed on missing an opportunity to get the highest price for the assets. However, the firm’s key focus now was on handing over the mines in a responsible way.

The spinoff plan is a nod to Anglo’s association with South Africa where the company was founded over 100 years ago. However, some major investors in South Africa have pushed Anglo to create a mining champion from its locals, rather than selling them off. The move also comes in line with a series of deals struck by international companies that are selling out of South African coal.

Source Credit: https://www.bloomberg.com/news/articles/2021-04-08/anglo-american-to-spin-off-south-african-coal-mines-in-june