SA’s Competition Commission approves Seriti purchase of South32 coal assets
THE acquisition of South32’s South African Energy Coal (SAEC) to Seriti Resources has been recommended by South Africa’s Competition Commission, said BusinessLive.
“In spite of the structural change from the merger, Seriti’s newfound position is unlikely to directly dovetail into greater leverage power for the merged entity during contract renegotiations and is therefore unlikely to have a significant effect on the price of coal to Eskom,” the commission said, recommending transaction approval to the Competition Tribunal.
The deal will make Seriti the largest supplier to Eskom, South Africa’s state-owned power utility which buys about 120 million tons a year of coal to fuel is power stations. Seriti will control about 30% of the Eskom market annually. It had previously bought the domestic coal mines of Anglo American.
Seriti supplies coal to Eskom’s Tutuka, Lethabo and Kriel power stations and has an upcoming mining project, the New Largo Coal Mine, intended to supply coal to Kusile power station. SAEC supplies the Duvha and Kendal power stations from its Khuthala and Ifalethu mines, said BusinessLive.
The purchase agreement, as announced late last year, is for an upfront payment of R100m with Seriti also assuming the liabilities present in the business.
Mike Teke, CEO of Seriti Resources, told Bloomberg News in June that he was considering adding production of chrome, manganese or iron ore to the firm’s coal portfolio, saying there were “immense opportunities”.
“We are going to take over several businesses that are not in coal. I want us to build a strong, formidable mining company,” Teke said.
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