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Anglo American: Path to coal exit may include JSE listing

The class action suit, which includes working and retired women and men mineworkers, was filed in the Gauteng Local Division’s High Court in mid-October. The class suit has been brought against nine mining companies owned by the Anglo American group.(Photo: Adobestock)

South Africa’s most famous mining company aims to get rid of its coal mines in the country within three years and is planning a new stock exchange listing for the unwanted assets.

Diversified mining group Anglo American, which had already said it intends to divest itself of its thermal coal assets in South Africa, on Thursday 7 May laid out a “likely preferred exit option” that could see a JSE listing for the operations.

Pointedly, the company made the remarks in written responses to shareholders, some of whom no doubt have concerns about the lump of coal in their portfolios. Because of the links between the use of coal and climate change and pollution, fossil fuel is losing favour with investors and banks worldwide.

This means it has the full attention of boardrooms mindful of the growing importance of ESGs — environmental, social and governance issues — to investors and other stakeholders. And Anglo American has been working hard on its ESG profile, notably but not exclusively in areas such as health and safety.

The specific question raised was: 

“How and when will stakeholders be provided with clarity and detail on the company’s approach and pathway to a responsible exit from thermal coal?”

To which Anglo replied:

 “We are … 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 on the Johannesburg Stock Exchange for the demerged business. We will continue to consider other exit options as we engage with stakeholders as part of our commitment to a responsible transition. 

“Given the significant scale and diversification of Anglo American and the capital allocation options we have across our global portfolio – combined with our overall trajectory towards those products that enable a cleaner, greener, more sustainable world – we believe that the long term prospects of our thermal coal operations in South Africa may be best served under different ownership,” the company said. 

To that end, Anglo has been reducing its thermal coal footprint, halving production since 2015 with the sale of its Eskom mines. It has also sold off its Australian thermal coal assets. 

Anglo earlier this year said it had received interest from potential buyers for the coal assets. Nothing is set in stone, given that the process is expected to take two to three years. By that time, a public listing for a focused coal producer might face stiff headwinds. But Anglo is framing the assets in the context of the pressing energy and development needs in poorer economies.

“For many countries, particularly in the developing world, access to reliable and affordable energy depends on access to thermal coal. We, therefore, expect an important ongoing role for responsible thermal coal mining, preferably by companies that recognise society’s needs and environmental expectations and the vital role that many mines play in their local communities. Our thermal coal operations in South Africa constitute a strong and attractive business with high-quality well-located assets and with access to established export infrastructure,” the company said.

Time will tell if this sales pitch works. In the meantime, Anglo seems content to retain its iron ore, platinum and diamond assets in South Africa, as well as its wine farm in Western Cape. BM

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