South32 to separate South Africa coal unit

Perth-based mining conglomerate South32 has flagged a potential sell-down and listing of its South African energy coal business after announcing today a $US301 million ($A395 million) investment in the division.

The investment is designed to extend the life of its Klipspruit colliery, which employs 740 people, by a further 20 years.

Klipspruit is one of South32’s three coal operations in South Africa, which together generated revenue of $US1.1 billion in FY17, about 13 per cent of the company’s total turnover.

South32 said it would restructure the South Africa energy coal unit and manage it separately from the rest of the group as a stand-alone business, with tailored functional support, systems and governance processes.

It will also seek to broaden ownership of the unit, via Broad-Based Black Economic Empowerment entities, employees and communities.

This process could lead to a listing of the business on the Johannesburg stock exchange.

Chief executive Graham Kerr said the changes would allow the South African operation to be more competitive while allowing the group to simplify its global organisation.

South Africa energy coal will continue to be consolidated into the group’s accounts on a 100 per cent basis until there is a change of control.