According to the company, the development activity at the Klipspruit extension project was expected to begin, with first coal from the open cast operation in 2019, and the standalone management of SAEC heading for an April start. The project extends the life of Klipspruit colliery to 2037 and the new SAEC requires ongoing investment to sustain production and meet its take-or-pay rail and domestic supply obligations.
Headed by Graham Kerr, South32 in a statement, said that the approval of the Klipspruit project would ensure employment for 740 people and create 4 000 jobs during construction. The company also said that the investment was expected to generate an internal rate of return of 20%-plus, by releasing 616-million tonnes of coal at the Klipspruit South and Weltevreden deposits, as well as fulfilling half of the company’s current obligations with Transnet. The primary aim of the creating the standalone SAEC was to improve its financial performance, with the restructured entity having separately tailored functional support, systems, and governance processes. The creation of the standalone SAEC would not only simplify global portfolio management but would also open the way for greater transformation potential by providing scope to broaden black economic empowerment, employee and community ownership, and possibly leading to SAEC’s listing on the JSE.
SAEC would continue to be consolidated in South32’s financial statements on a 100% basis until there was a change in control. South32 also mines manganese in South Africa and produces aluminum in both South Africa and neighboring Mozambique.
