Seriti has an eye on Optimum
Eskom’s new black-owned supplier, Seriti Resources, has finalised a R2.3bn cash purchase of three collieries from Anglo American and is keen to get its hands on the Guptas’ embattled Optimum mine.
Mike Teke, Seriti’s CEO, was the head of JSE-listed Optimum before it was bought by Glencore. Knowing the colliery well, he said Seriti would be very interested if it came up for sale.
“I never wanted Optimum to be sold. I know it very well. I’ve not spoken to the board yet about Optimum but it’s something we can explore. If I presented it to them a plan will have to come up,” he said.
Having access to Optimum, a mine owned by the Guptas’ Tegeta Resources, which has placed the mine in business rescue, would give Seriti export thermal coal. This would be desirable if Seriti wanted to list, adding to the steady revenue stream from cost-plus supply contracts with Eskom.
Teke said he and another partner in Seriti were exploring vast coal deposits in the Waterberg and were in talks with the company about possibly vending them into the company.
The transaction announced in April 2017 marked the decision by Anglo to cut its exposure to the state-owned power utility, which was insisting on 51% black ownership of its coal suppliers, something the Anglo board would not countenance because it would become a minority partner.
Anglo was also frustrated at the eight years of haggling with Eskom over the construction of the New Largo colliery to supply coal, with the debate raging fruitlessly over who would fund the cost-plus Eskom-tied mine and the ownership of the mine.
Anglo has also agreed to sell its undeveloped New Largo colliery to a consortium that includes Seriti, leapfrogging the new resources company into the top tier of coal suppliers to the state power utility.
Anglo CEO Mark Cutifani and Anglo American SA deputy chairman Norman Mbazima have said its sales process in SA had come to an end with the sale of the Eskom-linked mines and that it remained exposed to export thermal coal, iron ore, platinum group metals, diamonds and manganese from this country.
“This transaction continues the reshaping of our global asset portfolio based on value and the optimal deployment of capital, while realising value for our shareholders and ensuring reliable supply of coal to Eskom,” Cutifani said on Thursday.
The owners of Seriti, namely Masimong, Thebe Investment Corporation, Zungu Investments Company and Community Investment Holdings, which own 90% of the entity, provided funding towards the deal and secured debt from Standard Bank to fund the deal.
Community and employee trusts own the remaining 10% of the company.
“Seriti is committed to building a new South African mining champion and to providing Eskom with cost-effective, long-term coal supply solutions,” Teke said.
The sale also ticked a box for Anglo in creating a black-owned mining company with a solid set of assets, said Mbazima.