Anglo Coal in BEE Transaction

Anglo American’s wholly owned coal subsidiary Anglo Coal SA has taken another step toward meeting the South African government’s economic empowerment requirements with the creation of a R7 billion black-empowered coal firm. According to Business Day, the group said it has formed a new company, Anglo Inyosi Coal, which would be 27% owned by a consortium of black women, business people and communities. An employee share ownership scheme will be introduced this year. However, it is unclear to what extent the move would enable Anglo Coal to meet the requirements of the mining charter, which is a precondition to securing mining licenses. The charter requires 15% black equity ownership by 2009 and 26% by 2014. Anglo Inyosi Coal will own the Kriel colliery, which produces 10.5 million metric tons of coal a year, as well as four undeveloped coal properties: New Largo, Elders, Zondagsfontein and Heidelberg. The undeveloped coal properties can potentially produce another 38 million mt/y, mostly for the domestic market. The total resources of the new company are 4.1 billion mt of coal. Anglo Inyosi Coal will pay Anglo Coal R7 billion for the assets through R68 million in sharefunding by Anglo Coal, R25 million sharefunding by Inyosi and a R6.9 billion loan from Anglo American.