World Markets
AAL

Anglo American hires banks to prepare S.Africa coal spin-off

Credit: REUTERS/RODRIGO GARRIDO

Anglo American has hired RMB, Morgan Stanley and Rothschild & Co to advise on the separation and listing of its South African thermal coal assets, as it aims to cut exposure to the polluting fuel, two sources with direct knowledge said.

By Zandi Shabalala and Helen Reid

LONDON/JOHANNESBURG, Jan 28 (Reuters) - Anglo American AAL.L has hired RMB, Morgan Stanley and Rothschild & Co to advise on the separation and listing of its South African thermal coal assets, as it aims to cut exposure to the polluting fuel, two sources with direct knowledge said.

Anglo, listed in London and Johannesburg, is expecting to list its coal within two years, one of the sources said.

"Anglo Coal right now is following what's been announced in terms of the de-merger, but it's not like they've completely shut the door to a sale. It would just need to be at a price that is compelling enough for them to want to divert their attention," the second source said.

An outright sale of the assets would require the kind of large buyer that is hard to find for thermal coal, the sources said.

Anglo's overall market capitalisation is around $47 billion. The value of its coal assets is unclear, the sources said, as coal prices have surged in recent months and the COVID-19 pandemic has impacted previous estimates.

The company declined to comment on its advisers.

In an emailed statement it said it was working on the process and would "provide a further update in due course when we have clarity on timing and the exit mechanism".

RMB, Morgan Stanley and Rothschild & Co declined to comment.

The diversified miner said in May it preferred separating and listing its thermal coal operations on the Johannesburg Stock Exchange. Reuters reported the miner was still considering a sale.

For years, coal assets were seen as an easy way to generate cash and selling them was always sensitive in South Africa where they employ many people and provide for most of the country's power needs.

But since the 2015 Paris climate accord, pressure has steadily mounted on companies to reduce exposure to the most polluting fossil fuel.

Anglo has already sold a large portion of its South African and Australian coal assets, halving its production of thermal coal since 2015. In 2019, its South African coal assets made a $5 million loss and produced 27 million tonnes.

Glencore's GLEN.L outgoing CEO Ivan Glasenberg has also kept the door open for a possible spinoff of its thermal coal assets.

Coal can still be profitable, however, complicating efforts to agree the price of any sale.

Higher demand because of cold weather and rising gas prices have driven coal prices higher.

(Reporting by Zandi Shabalala in London and Helen Reid in Johannesburg; Editing by Veronica Brown and Barbara Lewis)

((zandi.shabalala@tr.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AAL

Latest Markets Videos

    Reuters

    Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

    Learn More