Deals

Seriti deal will transform SA’s mining and energy sectors

South Africa | Mining and metals

Mar 01, 2018

Standard Bank was instrumental in Seriti Resources’ acquisition of Anglo American’s Eskom-supplying coal assets in a deal that is set to transform South Africa’s mining and energy supply landscape.

In what is arguably one of the most important transformational mining transactions in the past decade, the deal will result in the transfer of almost a quarter of Eskom’s coal supply from an established global major to an emerging South African resources champion.

Seriti’s acquisition includes the New Vaal, New Denmark and Kriel mines, as well as a number of mine life extension projects. These assets were acquired outright at commercially compelling terms via a competitive bidding process.

Background to the deal

Seriti Resources is a broad-based, 84% black owned and controlled South African mining group, whose shareholders have significant and relevant experience in the acquisition, operation and development of large scale coal mines in South Africa.

100% of Seriti’s shareholding is held between Masimong Group, Thebe Investment Corporation, Zungu Investments and Community Investment Holdings. With a vision to create a sustainable legacy, the remaining 10% is held by employee and community trusts.

Anglo American’s strategy to exit its Eskom-tied assets meant that its interests in the New Vaal, New Denmark and Kriel coal mines – as well as the New Largo thermal coal project, – complemented Seriti’s national energy coal supply aspirations and its transformational objectives.

Driving inclusive growth

Through this landmark transaction Seriti has acquired high quality, well-established South African coal assets strategically important to Eskom’s base load power generation fleet. The assets collectively supply approximately 25 million tons of thermal coal per annum to Eskom power stations that currently provide around 20% of South Africa’s electricity needs.

In addition, the life extension development opportunities provide an attractive commercial solution to meet Eskom’s coal requirements well beyond 2030.

 “Supporting local players with meaningful employee and community ownership to acquire world-class coal assets via commercially credible transactions, is the best guarantor of Eskom’s future coal supply. Doing this in a way that drives inclusive growth in the South African economy, is also the best guarantor of the future socio-economic relevance, sustainability and longevity of South Africa’s mining sector.”   - Mike Teke, Seriti CEO

 

Powering South Africa’s corporate champions

As exclusive Investment Banker, mandated lead arranger, underwriter and book runner to Seriti Resources, Standard Bank worked closely with Anglo and Eskom to structure a deal that would ensure a seamless transition of these critical assets and ultimately determine South Africa’s future energy security and growth prospects.

Our partnership with Seriti Resources has assisted in making them Eskom’s largest black-controlled coal supplier. Our experience, expertise and credibility facilitated a transaction that has not only transformed the mining industry in South Africa, but also empowered the lives of its people.

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