Anglo American (AAL) has said it will demerge its South African thermal coal assets in two to three years, listing a new entity on the Johannesburg Stock Exchange.
The major miner said it would consider alternatives but this was the “preferred exit option”. Anglo already has its Kumba Iron Ore and Anglo American Platinum subsidiaries listed on the JSE, but a demerger would be closer to South32 (S32) splitting off from BHP (BHP) in 2015. The miner said the thermal coal business was still valuable when answering a written investor question in place of its AGM. “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.
On top of the South African coal assets, Anglo has a one-third share of the Cerrejon mine. In 2019, its overall thermal coal production was 35.8m tonnes (t), including the 10t going to Eskom and the 1.4t mined in the metallurgical coal operations.
Thermal coal overall contributed just over 1 per cent of underlying cash profits, with $125m, although this was because the South African division went from a $650m underlying cash profit in 2018 to a $5m cash loss in 2019.
Coal assets have become less popular across the sector as investor interest in greener portfolios has increased. Rio Tinto (RIO) has sold off its coal assets, although it is building a coal power plant for its Oyu Tolgoi copper mine in Mongolia, South32 has found a buyer for its own South African coal mines, while Glencore (GLEN) has said it would not increase production from 2019 levels.
In a published Q&A in place of its AGM, Anglo also said that it would aim to cut its scope 3 emissions but did not set a target for them, as BHP has said it would do. The miner has the goal of becoming carbon neutral at its operations by 2030.
