03 July 2007
Source: Business Report Online, by Justin Brown
Johannesburg - BHP Billiton had completed the sale of its Koornfontein coal mine in Mpumalanga for $60 million (R417 million), it announced yesterday. This was $15 million less than mooted almost a year ago. Bronwyn Wilkinson, BHP Billiton's spokesperson, said the sale price had declined due to a maintenance backlog over the past year and a change to one of the operation's supply agreements, as well as other factors.
The mine was sold to a new entity with a black economic empowerment shareholding of 50 percent plus one share. The empowerment consortium is led by Landani Mthwa's Siyanda Resources and Reuel Khoza's AKA Resources. It includes various broad-based groups as well as a Koornfontein employee trust. Coronation Capital and Investec Bank hold the balance of the shares in the new entity.
BHP Billiton said the 3 million ton a year Koornfontein mine and its Richards Bay coal terminal allocation of 1.5 million tons a year had been sold with effect from Sunday. The economic benefit of the operation passed on July 1 last year, when BHP Billiton agreed to sell the mine for $75 million.
The deal was concluded after meeting various regulatory requirements. These included the conversion and transfer of Koornfontein's mining rights and the approval of the competition commission. BHP Billiton will receive cash for the sale as well as compensation for potential future coal sales to Eskom. The group has provided R70 million of its own money as a loan to the empowerment consortium.
Meanwhile, the group said the sale of its Optimum coal mine, also in Mpumalanga, was likely to take place in the third quarter of this year. It previously aimed to sell the mine in the second quarter. Wilkinson said the sale of Optimum was proving to be "very complex", but declined to offer details.
BHP Billiton has sold a number of coal mines in South Africa and has reduced its export allocation at Richards Bay. After the Optimum sale, it will own three coal mines in South Africa out of the six it owned at the start of 2005. The sale will reduce BHP Billiton's annual coal output in South Africa to about 40 million tons a year from 54.65 million tons in the year to June 2005. Its Richards Bay export allocation will decline to almost 18 million tons a year after Optimum is sold, from almost 27 million in early 2005. Optimum produces about 13 million tons a year, half of which is supplied to Eskom's Hendrina power station. The mine employs about 1 350 people.
BHP Billiton gained 3.31 percent to R201.45 on the JSE yesterday. The general mining sector rose 3.03 percent.