South African coal mining company Wescoal has acquired a 50% interest in Arnot coal mine, previously owned by Exxaro.
Wescoal will acquire the assets, liabilities and employees of the Arnot coal mine in Mpumalanga from Exxaro Coal Mpumalanga (ECM) in partnership with Innovators Resources (IR).
The shareholders of IR are previous employees of ECM who were retrenched during the shutdown in December 2015. Their initiative to restart the Arnot Mine and unlock its value created the opportunity for Wescoal to become a partner. Wescoal’s 50% interest is subscribed for in Arnot HoldCo whose only asset is its shareholding in Arnot OpCo, which in turn holds one asset only, namely the Arnot Mine.
“This acquisition will fast track the restart of mining at Arnot, following the necessary approvals, such as section 11 from the Department of Mineral Resources (DMR) and the assignment of all the rights and obligations of ECM under the CSA with Eskom to Arnot OpCo,” says Dr Humphrey Mathe, interim CEO at Wescoal.
“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,” adds Mathe.
This transaction will enable development of coal reserves that would have been sterilised by the mine closure process. Arnot Mine is adjacent to the Arnot Power Station and coal will be delivered to the power station through a conveyer belt, resulting in a cost competitive advantage with minimum carbon tax impact.
The supply and off-take of coal from Arnot Mine, as per the original Coal Supply Agreement (CSA), came to an end on 31 December 2015. ECM is currently in the process of rehabilitating the older and more depleted sections as part of its closure and rehabilitation legal obligations. ECM took the strategic decision to transfer the Business to Arnot OpCo to empower previously retrenched employees.