Johannesburg headquartered, mining giant Anglo American Plc has unveiled its plans to demerge its South African thermal coal assets to a new holding company, Thungela Resources following investor pressure to disengage itself from the most polluting fuel.
According to the notification, Thungela Resources will be listed in Johannesburg and London in June and an initial cash infusion of $171 million is planned to be made by Anglo American to support the firm.
Anglo American moving away from coal
Since 2015 Paris climate accord, pressure has steadily mounted on mining companies to reduce exposure to the most polluting fossil fuel. In 2018, Anglo American had sold a group of mines to Seriti Holdings Ltd which then bought more mines from another miner, South32.
Post the demerger, Anglo American now jointly owns Cerrejon thermal coal mines in Colombia along with Glencore and BHP, which it also plans to sell in the coming future.
The company produced 16.5 mn t of thermal coal from its South African assets in 2020, down by 7% y-o-y basis and sold the same at an average rate of $61/t, FoB RBCT basis, according to the company financial statements.
Impact on Indian market
The mining giant is one of the key suppliers of thermal coal to the Indian market, which is used in the sponge iron and power sector.
With the demerger happening, no major impact is anticipated in case of supplies to India, as after Europe restricted its coal usage few years back, India is the next big export market for the thermal coal miners globally.
Businesses exiting coal
London headquartered Rio Tinto Group had sold its last coal mine in 2018 while Australia based BHP Group is also in the process of exiting the business. That would leave Glencore Plc, the world’s biggest thermal coal shipper, as the last major miner in industry. Glencore has instead committed to run down its assets by 2050 and in doing so become carbon neutral.
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