Amid growing investor pressure to exit the polluting resource, London-listed miner Anglo American announced on Tuesday that it would demerge its South African thermal coal assets into a new company, Thungela, which would be listed in Johannesburg and London.
Spin-off company: Thungela
Anglo American said that subject to shareholder approval in May, it would separate its South African thermal coal business into a new business this year.
The miner said that the spin-off company, Thungela Resources Limited would have a primary listing on the Johannesburg Stock Exchange and a standard listing on the London Stock Exchange. Investors will receive one share in Thungela for every 10 shares they hold in Anglo American.
Anglo American said that Thungela would be provided an initial cash injection of 2.5 billion rand ($172.68 million). The miner said that it would also sell and market Thungela’s products for at least three years.
Thungela’s chief executive July Ndlovu said on a call with reporters that it plans to woo investors by paying 30% of free cash flow in dividends.
Push for cleaner fuels
Mining companies have been under sustained pressure from investors to exit from coal due to its contribution to climate change. The governments have also been keen to switch to cleaner fuels.
The burning of thermal coal in power stations to generate electricity is responsible for nearly 30 per cent of global carbon dioxide emissions.
Anglo’s chief executive Mark Cutifani had previously announced that the company is also looking to exit its Cerrejon thermal coal mine in Colombia within 1-1/2 to 2 years.
Anglo American’s chief executive Mark Cutifani said: “As the world transitions towards a low-carbon economy, we must continue to act responsibly. Our proposed demerger of what are precious natural resources for South Africa allows us to do exactly that.”