Eclectic mining heavyweight South32 (ASX:S32)
has finally severed ties with thermal coal, following the completed sale of the company’s last coal business.
The Perth-based miner has announced its divestment of the company’s interest in South Africa Energy Coal, as the company transferred its stake holding to a consortium led by Seriti Resources.
The transaction is worth approximately 100 million South African Rand or $9.4 million.
The purchase price also includes a deferred consideration component where South32 will receive 49 per cent 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.
The triple-listed mining company has a diversified minerals portfolio spanning across alumina, aluminium, manganese, silver, zinc, lead, nickel and metallurgical coal.
The $14.2 billion company’s withdrawal from the thermal coal industry is considered a sensible move, amidst eco-friendly trends towards sustainability.
The company commented on the benefits of the sale, “Our vision was two-fold. First, we wanted to ensure that the business would be sustainable for the long-term, for the benefit of its employees, customers and local communities. Of equal importance was our objective for it to become a black-owned and -operated business, consistent with South Africa’s transformation agenda.”
South32 has also unveiled a $250 million budget for mine recovery and rehabilitation projects.
Shares in South32 (ASX:S32)
are trading 2.2 per cent higher at $3.08