Anglo American (LON: AAL) is moving forward with its plans to exit coal by announcing it this year amid growing investor pressure to abandon the polluting commodity.
The demerged company, Thungela Resources, will list on the Johannesburg and London stock exchanges, Anglo said on Thursday. Investors will receive one Thungela share for every ten Anglo American shares they hold. Anglo executive July Ndlovu has been named chief executive officer.
The soon-to-be standalone miner produced 16.5 million tonnes of coal last year and has assets worth $1.3 billion. It is close to an established rail network with secure access to export markets via the Richards Bay Coal Terminal.
The demerged company, Thungela Resources, will list on the Johannesburg and London stock exchanges
Thungela has 137 million tonnes of reserves and 756 million tonnes in resources, along with seven operations 鈥� four open-pit and three underground.
鈥淎s the world transitions towards a low-carbon economy, we must continue to act responsibly,鈥� chief executive Mark Cutifani . 鈥淥ur proposed demerger of what are precious natural resources for South Africa allows us to do exactly that.鈥�
Mounting pressure from investors, regulators and environmental organizations has pushed miners to either sell coal assets or to limit their exposure to the fossil fuel in recent years.
The world鈥檚 top miner, BHP (ASX, LON, NYSE: BHP), has also announced plans to exit thermal coal as part of its commitment to reduce emissions.
Rio Tinto (ASX, LON, NYSE: RIO), the world鈥檚 second-largest mining company, sold its last coal mine in 2018.
Anglo American has consistently been聽offloading coal operations since 2014. Last year it announced it intended to spin off its South African unit within the next three years. It also made the decision to sell Cerrej贸n, its thermal coal subsidiary in Colombia.
The strategy won鈥檛 affect the emissions caused by the thermal coal produced from the mines, which will continue running under Thungela. But Anglo said it wanted to give investors the choice to whether or not support the coal industry.
鈥淭he proposed聽demerger recognizes the diverse range of views held by Anglo American鈥檚 shareholders in relation to thermal coal,鈥� the company said. The plan 鈥減rovides the choice to act on such views and, following the implementation of the proposed聽demerger, to either retain, increase or decrease their interests in Thungela.鈥�
Anglo, BHP and Rio鈥檚 decision leaves miner and commodities trader Glencore (LON: GLEN) as the last major company in the coal sector.
The Swiss firm does have an ambitious plan to聽reach net-zero emissions by 2050聽through reducing its direct and indirect carbon footprint by 40% by 2035, compared to 2019 levels.
Not fully out
While Anglo American is moving away from the most polluting kind of coal, metallurgical or coking coal appears to be one of its key commodities moving forward.
The miner聽recently increased its medium-term guidance聽for the steelmaking ingredient to an estimated 26-28 million tonnes by 2022.
Its main customers are all in Asia, including India, all of whom rely on coal-fired power, Cutifani said. 鈥淵ou can鈥檛 just walk away from billions of people across the globe,鈥� he noted.
Anglo said it would inject $170 million into Thungela and continue to market the company鈥檚 products to customers for three and a half years. In addition, it would provide 鈥渃ontingent capital support鈥� until the end of 2022 if thermal coal prices drop below a certain threshold.
The spin-off will be subject to a vote by shareholders at Anglo鈥檚 annual general meeting in May and requires 75% approval.