South32 sees loss of up to $175 mln in S.African coal unit sale

Australian miner South32 Ltd S32.AX said it is expected to book a loss of up $175 million from the sale of its South African thermal coal assets, which was finalised with mining group Seriti Resources on Monday.

The deal would allow South32 to reorganise its business by exiting energy coal at a time when many banks and insurers are scaling back financing for the sector because of global warming concerns.

South32 had announced the divestiture in November 2019 and terms of a coal supply deal with state-run South African power provider Eskom, while approval from the South African Treasury had delayed its closure.

A deal with Eskom was necessary for South32 to fully hand over the controls of the mining unit to South Africa’s Seriti.

“We remain focussed on reshaping our portfolio with a bias to the base metals important for a low-carbon future by advancing our development options in North America and continuing to invest in greenfield exploration,” Chief Executive Officer Graham Kerr said on Monday.

The miner said loss on sale is expected to be between $125 million and $175 million, and will be excluded from underlying earnings, while the assets will be noted as “discontinued operations” in its full-year results.

Last month, South32 said it had struck a deal to smoothen the sale process by partially funding environmental clean-up costs of mines from its South African unit.
Source: Reuters (Reporting by Anushka Trivedi in Bengaluru, Editing by Sherry Jacob-Phillips)