Anglo American to spin off South African coal mines

Anglo American Plc will separate its South African coal mines into a new business this year, as the company accelerates its response to investor pressure over the most-polluting fuel.

Anglo has been plotting an exit from thermal coal for more than a year and has always said separating its South African business was the most likely outcome. Anglo will still own a coal mine in Colombia that it’s also planning to sell and coking coal mines in Australia, used to make steel rather than burned for power.

The new business, called Thungela Resources Ltd., will be listed in Johannesburg and London in June, the miner said in a statement on Thursday. Investors will receive one Thungela share for every ten Anglo American shares that they hold. Anglo executive July Ndlovu has been named chief executive officer.

Anglo rose 1.8% at 11:18 a.m. in London.

The world’s biggest miners have been looking to exit thermal coal as more investors say they don’t want exposure to the fuel. Anglo has already dramatically reduced its production in recent years, cutting output by more than half.

However, CEO Mark Cutifani has previously acknowledged that the company probably missed the best opportunity to get the highest price for the assets. Instead, he said the focus was on handing over the mines in a responsible way.

“We did have some bids but in the end we felt the best option was to de-merger and make sure the business was set up with no debt, give it a running start,” Cutifani said during a conference call. “Its the best way to set them up for future success and at the same time making sure we stick to our commitments to all our stakeholders.”

The spinoff plan is also a nod to Anglo’s relationship with South Africa, the country where it was founded more than 100 years ago. Some of its biggest South African investors have long pushed for Anglo to create a mining champion from its local assets, rather then sell them off piecemeal.

It’s also the latest in a series of deals by international resource companies selling out of South African coal. Anglo previously sold a group of mines to Seriti Resources Holdings Ltd. The company has also been approved to acquire more mines from South32 Ltd. The exodus began when Total SA sold its assets to Exxaro Resources Ltd. in 2014/