Two global resources producers have announced plans to begin exiting their coal operations.
Anglo American and South32 decided it is neither environmentally nor financially sustainable to keep mining coal forever, and think they would be better off simply walking away from the commodity.
“Anglo American has been pursuing a responsible transition away from thermal coal for a number of years now,” CEO Mark Cutifani said in a public statement.
Anglo is now demerging its South African coal operations and creating a new entity called Thungela Resources. The deal involves transferring shares in Anglo’s thermal coal operation to Thungela, and listing the new holding company on both the Johannesburg and London stock exchanges.
“As the world transitions towards a low carbon economy, we must continue to act responsibly – bringing our employees, shareholders, host communities, host governments and customers along with us,” Cutifani said.
“Our proposed demerger of what are precious natural resources for South Africa allows us to do exactly that.”
Anglo’s marketing business will continue to help Thungela sell and market its commodities for three years plus a further “six-month transitional period”.
“We are confident that Thungela will be a responsible steward of our thermal coal assets in South Africa, benefiting from an experienced and diverse management team and board,” Cutifani said.
The remarks came just days after South32 sold its stake in South32 SA Coal Holdings (also known as South Africa Energy Coal) to Seriti Resources, after reporting multiple mining areas made losses.
“Securing the long-term sustainability of South Africa Energy Coal has been our key objective in transitioning the business to black ownership, consistent with South Africa’s transformation imperative,” South32 CEO Graham Kerr said in a public statement.
“For South32, the transaction will significantly simplify our business, substantially reduces our capital intensity, improves the group’s underlying operating margin and supports our strategy to re-shape our portfolio with a bias to base metals.”
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The stake sale is expected to be finalised shortly.