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Anglo American Plc will separate its South African coal mines into a new business this year, as the company ramps up its response to investor pressure on the most polluting fuel.
Anglo has been planning an exit from thermal coal for over a year and has consistently said the separation of its South African operations was the most likely outcome. Anglo will still own a coal mine in Colombia that it also plans to sell and coking coal mines in Australia, which are used to make steel rather than burnt to generate electricity.
The new company, called Thungela Resources Ltd., will be listed in Johannesburg and London in June, the miner said in a statement Thursday. Investors will receive one Thungela share for every ten Anglo American shares they own. Anglo July leader Ndlovu has been appointed managing director.
Anglo was trading 2.2% higher at 8:05 am in London.
The world’s largest miners have sought to exit thermal coal as more investors say they don’t want to be exposed to the fuel. Anglo has already significantly reduced its production in recent years, cutting it by more than half.
However, CEO Mark Cutifani previously acknowledged that the company probably missed the best opportunity to get the highest price for assets. Instead, he said the focus was on responsibly handing over mines.
Read more: Stuck with coal pits the world needs, but few want
The spinoff plan is also a nod to Anglo’s relationship with South Africa, the country where it was founded over 100 years ago. Some of its biggest South African investors have long pushed for Anglo to create a mining champion out of its local assets, rather than selling them piecemeal.
Of course, Anglo’s exit will not affect emissions caused by thermal coal produced by the mines, which will continue to operate under Thungela. But Anglo says its plan gives investors more choice in deciding whether or not to support the coal sector.
“Proposal to emerger recognizes the diversity of views of Anglo American shareholders when it comes to thermal coal, ”the company said. The plan “gives the choice to act according to these points of view and, after the implementation of the proposal to emerger, either to retain, increase or decrease their interests in Thungela. “
Leave the company
The Rival Rio Tinto group sold its last coal mine in 2018 and the BHP group is also in the process of exiting the activity. That would leave Glencore Plc, the world’s largest shipper of thermal coal, as the last major miner in the industry. Rather, Glencore is committed to reducing its assets by 2050 and, in doing so, becoming carbon neutral.
While Anglo has now made clear plans for South Africa, getting out of Colombia is more difficult. The company owns the Cerrejon mine in partnership with Glencore and BHP. The operation ships primarily to Europe, where the coal market has been hit hard by low natural gas prices, potentially limiting the pool of interested buyers.
Anglo said it would spend around $ 170 million on the new venture and could complete next year if thermal coal prices drop below a certain level.
(Updates with company actions and reviews.)
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