SOUTH AFRICA – Wescoal Holdings Limited, a South African coal miner, said that it has received the ministerial consent to acquire a 50 percent interest in Arnot coal mine in Mpumalanga.
Wescoal intends to restart coal production and supply to Eskom’s Arnot Power Station during the 2020 financial year, report The Citizen.
This follows Wescoal’s announcement, in February this year, that it will acquire the assets, liabilities and employees of the Arnot coal mine in Mpumalanga from Exxaro Coal Mpumalanga, in partnership with Innovators Resources (IR).
However, the transaction was approved subject to several key conditions precedent including the consent by the minister of mineral resources, in terms of section 11 of the Mineral and Petroleum Resources Development Act (MPRDA), to the cession of the mining right by Exxaro in favour of Arnot Operating Company.
Wescoal said that at the time of receiving the ministerial consent, the only outstanding conditions precedent before Arnot to be transferred to Arnot OpCo are the approval by the competition authorities.
In addition, the deal was yet to see the assignment of all the rights and obligations of Exxaro under the coal supply agreement with Eskom to Arnot OpCo.
Innovators Resources’ shareholders are previous employees of Exxaro Coal Mpumalanga who were retrenched during the shut-down in December 2015.
Their initiative to restart the Arnot mine and unlock its value created the opportunity for Wescoal to become a partner.
Wescoal said its 50% interest is subscribed for in Arnot Holding Company whose only asset is its shareholding in Arnot OpCo, which in turn holds one asset only, the Arnot Mine.
“Importantly, this is a significant broad-based empowerment Transaction which will secure employment and provide employees and communities around the mine with equity participation as outlined in Mining Charter III and we are excited that Wescoal Mining is the enabling partner in the relationship with IR.
“This transaction will enable development of coal reserves that would have been sterilized by the mine closure process,” it said.
Wescoal added that they are confident that Arnot’s infrastructure can promote a “cost competitive advantage with minimum carbon emissions environmental impact.
“In this regard, Arnot OpCo has responded on 2 April 2019 to the Eskom Request for Proposal (RFP) to supply coal to the Arnot Power Station.”
Wescoal said its strategy was focused on securing additional resources and strategic interests in coal and key logistics infrastructure and it had actively sought out acquisitive value-enhancing opportunities, such as this extensive coal resource base.