TIDMAAL
RNS Number : 7477U
Anglo American PLC
08 April 2021
8 April 2021
Anglo American to demerge South Africa thermal coal operations
Anglo American plc ("Anglo American") announces the demerger of
its thermal coal operations in South Africa, subject to the
approval of Anglo American's shareholders on 5 May 2021.
The separation will be implemented through the transfer of Anglo
American's thermal coal operations in South Africa to a new holding
company, Thungela Resources Limited ("Thungela"), the demerger of
the Thungela shares to Anglo American shareholders and the primary
listing of Thungela's shares on the Johannesburg Stock Exchange
(the "JSE") and standard listing on the London Stock Exchange (the
"LSE").
Mark Cutifani, Chief Executive of Anglo American, said: "Anglo
American has been pursuing a responsible transition away from
thermal coal for a number of years now. As the world transitions
towards a low carbon economy, we must continue to act responsibly -
bringing our employees, shareholders, host communities, host
governments and customers along with us. Our proposed demerger of
what are precious natural resources for South Africa, allows us to
do exactly that.
"We are confident that Thungela will be a responsible steward of
our thermal coal assets in South Africa, benefiting from an
experienced and diverse management team and board. While
representing just a small proportion of Anglo American today, we
are laying the foundation for South Africa's leading coal business,
setting it up for success to deliver value for all its
stakeholders. Looking forward, we believe the prospects for
long-term value delivery are greatest as two standalone businesses,
each with their own strategy and access to capital."
July Ndlovu, CEO of Thungela, said: "Thungela is a leading South
African producer of high quality, low cost export thermal coal,
well positioned to benefit from improved market conditions, and
providing a reliable and affordable energy source to our customers
mainly in developing economies. We have significantly repositioned
and upgraded our portfolio in recent years into a highly
competitive producer of export product, with established access to
world-class export infrastructure.
"As an independent business we will continue to contribute
significantly to our host communities and South Africa's
development objectives. As part of our commitment to creating an
enduring positive legacy, we are establishing an employee
partnership plan and a community partnership plan, with each
holding a 5% interest in the Thungela thermal coal operations in
South Africa, thereby enabling employees and communities to share
in the financial value that we generate.
"Guided by the high standards set by Anglo American, Thungela is
committed to operating sustainably - continuing to drive safety,
health, environmental, governance and social programmes for the
benefit of our employees, host communities and shareholders. The
demerger of Thungela and our listing on the JSE will represent yet
another major milestone for Anglo American's long-running
contribution towards transforming South Africa's mining
industry."
The proposed demerger recognises the diverse range of views held
by Anglo American's shareholders in relation to thermal coal and
therefore provides Anglo American's shareholders, including those
with specified investment criteria, with the choice to act on such
views and, following the implementation of the proposed demerger,
to either retain, increase or decrease their interests in Thungela.
The proposal also allows Thungela to attract new shareholders and
to access new sources of capital as an independent company offering
direct exposure to thermal coal.
Anglo American is committed to setting up Thungela as a
sustainable standalone business, including by providing an initial
cash injection of ZAR2.5 billion (approximately $170 million) and
further contingent capital support until the end of 2022 in the
event of thermal coal prices in South African rand (ZAR) falling
below a certain threshold.
Following the implementation of the proposed demerger, and in
line with Anglo American's responsible approach, Anglo American's
marketing business will continue to support Thungela in the sale
and marketing of its products for a three-year period with an
additional six-month transitional period thereafter. This
transitionary arrangement ensures that customers receive a
consistent service and supply of thermal coal while Thungela
concentrates on enhancing the performance of its operations while
continuing to receive optimal value for its products in the market.
The three-year term, and the additional six-month roll-off period,
also provide time for Thungela to build its own global marketing
capabilities should it choose to do so.
Proposed demerger process
In order for the proposed demerger to be implemented, Anglo
American shareholder approval will be sought at a general meeting
and court meeting, both expected to be held on 5 May 2021 following
Anglo American's Annual General Meeting. If it is approved, it is
expected that the demerger would be effective on 4 June 2021, with
Thungela's shares being listed and admitted to trading on the JSE
and LSE on 7 June 2021.
Following completion of the proposed demerger, 100% of the
issued share capital of Thungela will be held by Anglo American
shareholders who will each receive one Thungela share for every ten
Anglo American shares that they hold. Each Anglo American
shareholder will also retain their existing shareholding in Anglo
American. Thungela will hold 90% of the thermal coal operations in
South Africa with the remaining 10% held collectively by the
employee partnership plan and the community partnership plan.
Additional information
A shareholder circular setting out further detail in relation to
the demerger, including expected key dates has been published on
www.angloamerican.com/products/thermal-coal/demerger.
In respect of the JSE and LSE listing, a Thungela combined
pre-listing statement and prospectus is expected to be published on
Anglo American's website (www.angloamerican.com) and Thungela's
website (www.thungela.com) later today.
In accordance with UK Listing Rule 9.6.1, a copy of the circular
has been submitted to the Financial Conduct Authority (FCA) and
will shortly be available for inspection via the National Storage
Mechanism.
Anglo American will host a virtual investor and analyst
presentation at 09:00 UK time / 10:00 South Africa time today.
Access and registration instructions are available on Anglo
American's website (www.angloamerican.com/investors).
Thungela will host a virtual investor and analyst presentation
at 08:00 UK time / 09:00 South Africa time on 6 May 2021. Access
and registration details will be provided nearer the time.
Notes to editors:
Thungela Resources will be the listed holding company for the
demerged thermal coal operations in South Africa, constituting a
strong and attractive business with high quality well-located
assets and with access to established export infrastructure. These
operations provide a wide range of economic and social benefits for
host communities and for South Africa, including significant
employment, tax revenues, export earnings, and the provision of
many essential community services. Thungela means to "ignite" in
isiZulu.
At the 2021 year to date average FOB South Africa market price
of $91 per tonne, Thungela is well positioned to capitalise on
improved and more stable market fundamentals. In 2018, when the
average FOB South Africa price was $98 per tonne and FOB costs were
c.$61 per tonne, the assets produced 18.4 million tonnes of export
saleable production and generated $558 million of operating cash
flow(1) . 2020 FOB costs were $51 per export tonne and are expected
to be similar in real terms in local currency in 2021. The gross
assets of Thungela that are the subject of the proposed demerger
were valued at $1,294.5 million as at 31 December 2020. For the
year ended 31 December 2020, no profits were attributable to the
assets comprising the thermal coal operations in South Africa.
The Thungela Board will comprise Sango Ntsaluba as independent
Non-Executive Chair, July Ndlovu as Chief Executive Officer, Deon
Smith as Chief Financial Officer, Kholeka Mzondeki as Chair of the
Audit Committee, Ben Kodisang and Thero Setiloane as Independent
Non-Executive Directors and Seamus French as a Non-Executive
Director.
Thungela value proposition:
-- A leading South African thermal coal exporter, with 16.5
million tonnes of attributable export saleable production in
2020;
-- Well positioned on established rail network with secure
access to export markets via the Richards Bay Coal Terminal;
-- Low cash-cost assets, well positioned to benefit from a
favourable thermal coal market environment;
-- Strong suite of life extension and replacement options;
-- Robust ESG framework underpins licence to operate;
-- Right-sized organisational model focused on safety and business improvement;
-- Experienced executive management team led by July Ndlovu as CEO and Deon Smith as CFO;
-- Seasoned, highly qualified board of directors led by Sango
Ntsaluba as Chair and Kholeka Mzondeki as Chair of the Audit
Committee.
(1) $558 million of operating cash flow represents the ZAR7,387
million of net cash (outflow) / inflow from operating activities
before income taxes, as reported in 2018, converted to US$ using
the 2018 average ZAR:USD FX rate of 13.25.
Anglo American is a leading global mining company and our
products are the essential ingredients in almost every aspect of
modern life. Our portfolio of world-class competitive operations,
development projects and undeveloped resources, provides many of
the metals and minerals that enable a cleaner, greener, more
sustainable world and that meet the fast growing consumer-driven
demands of developed and maturing economies. With our people at the
heart of our business, we use innovative practices and the latest
technologies to mine, process, move and market our products to our
customers - and to discover new resources - safely and
sustainably.
As a responsible producer of diamonds (through De Beers),
copper, platinum group metals, the steelmaking ingredients of iron
ore and metallurgical coal, and nickel - with crop nutrients in
development and thermal coal operations planned for divestment - we
are committed to being carbon neutral across our operations by
2040. We work together with our business partners and diverse
stakeholders to unlock sustainable value from precious natural
resources for the benefit of the communities and countries in which
we operate, for society as a whole, and for our shareholders. Anglo
American is re-imagining mining to improve people's lives.
www.angloamerican.com
For further information, please contact:
Media Investors
UK UK
James Wyatt-Tilby Paul Galloway
james.wyatt-tilby@angloamerican.com paul.galloway@angloamerican.com
Tel: +44 (0)7817 735 337 Tel: +44 (0)7584 267 361
Robert Greenberg
Marcelo Esquivel robert.greenberg@angloamerican.com
marcelo.esquivel@angloamerican.com Tel: +44 (0)7826 943 836
Tel: +44 (0)7818 529 638
Katie Ryall Emma Waterworth
katie.ryall@angloamerican.com emma.waterworth@angloamerican.com
Tel: +44 (0)7513 134 971 Tel: +44 (0)7843 069 912
South Africa
Nevashnee Naicker
nevashnee.naicker@angloamerican.com
Tel: +27 (0)71 164 5719
Sibusiso Tshabalala
sibusiso.tshabalala@angloamerican.com
Tel: +27 (0)63 684 7470
Nomonde Ndwalaza
Nomonde.ndwalaza@angloamerican.com
Tel: +27 (0)66 311 1133
Forward-looking statements:
This announcement includes forward-looking statements. All
statements other than statements of historical facts included in
this announcement, including, without limitation, those regarding
Anglo American's financial position, business, acquisition and
divestment strategy, dividend policy, plans and objectives of
management for future operations (including development plans and
objectives relating to Anglo American's products, production
forecasts and Ore Reserves and Mineral Resource estimates), are
forward-looking statements. By their nature, such forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of Anglo American, or industry results, to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements.
Such forward-looking statements are based on numerous
assumptions regarding Anglo American's present and future business
strategies and the environment in which Anglo American will operate
in the future. Important factors that could cause Anglo American's
actual results, performance or achievements to differ materially
from those in the forward-looking statements include, among others,
levels of actual production during any period, levels of global
demand and commodity market prices, mineral resource exploration
and development capabilities, recovery rates and other operational
capabilities, the effects of global pandemics and outbreaks of
infectious diseases, the availability of mining and processing
equipment, the ability to produce and transport products
profitably, the availability of transport infrastructure, the
impact of foreign currency exchange rates on market prices and
operating costs, the availability of sufficient credit, the effects
of inflation, political uncertainty and economic conditions in
relevant areas of the world, the actions of competitors, activities
by governmental authorities such as permitting and changes in
taxation or safety, health, environmental or other types of
regulation in the countries where Anglo American operates,
conflicts over land and resource ownership rights and such other
risk factors identified in Anglo American's most recent Annual
Report. Forward-looking statements should, therefore, be construed
in light of such risk factors and undue reliance should not be
placed on forward-looking statements.
These forward-looking statements speak only as of the date of
this announcement. Anglo American expressly disclaims any
obligation or undertaking (except as required by applicable law,
the City Code on Takeovers and Mergers (the "Takeover Code"), the
UK Listing Rules, the Disclosure and Transparency Rules of the
Financial Conduct Authority, the Listings Requirements of the
securities exchange of the JSE Limited in South Africa, the SIX
Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock
Exchange and any other applicable regulations) to release publicly
any updates or revisions to any forward-looking statement contained
herein to reflect any change in Anglo American's expectations with
regard thereto or any change in events, conditions or circumstances
on which any such statement is based. Nothing in this announcement
should be interpreted to mean that future earnings per share of
Anglo American will necessarily match or exceed its historical
published earnings per share.
Certain statistical and other information about Anglo American
included in this announcement is sourced from publicly available
third-party sources. As such, it has not been independently
verified and presents the views of those third parties, though
these may not necessarily correspond to the views held by Anglo
American and Anglo American expressly disclaims any responsibility
for, or liability in respect of, such third-party information.
Legal Entity Identifier: 549300S9XF92D1X8ME43
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