Bloomberg News

BHP Sells Coal Stake in South Africa to Black Investors

December 13, 2011

(Updates with details on funding from first paragraph.)

Dec. 13 (Bloomberg) -- BHP Billiton Ltd., the world’s biggest mining company, said it will provide funding to assist a group of black investors led by Pembani Group (Pty) Ltd. to buy a stake in its South African energy coal unit.

The company declined to comment on the value of the transaction, which will see 8 percent of shares in BHP Billiton Energy Coal South Africa, known as Becsa, transferred to the black-owned group. Pembani, formerly known as Worldwide African Investment Holdings (Pty) Ltd., is chaired by Phuthuma Nhleko, a former chief of MTN Group Ltd., Africa’s biggest mobile-network company, and a current director of BP Plc.

The company will provide a loan “broadly on commercial terms” to Pembani to finance the purchase, Kesagee Nayager, a spokeswoman for BHP, said in an e-mailed response to questions. “It is expected that Pembani will service their loan commitment from the normal dividends paid by Becsa to its shareholders.”

South African mine operators must have 26 percent black ownership by 2014 to redistribute wealth to those disadvantaged under apartheid. Operators’ mining rights can be withdrawn should they not meet the requirements. The governing African National Congress’s Youth League is calling for nationalization of mines because the pace of change is too slow.

Becsa, the country’s second-biggest exporter of thermal coal, is “now in a position of more than meeting the transformation requirements” of South African law and all its mining licenses have been converted to meet legal needs, it said in an e-mailed statement today.

Delmas Colliery

BHP produced about 34 million metric tons of thermal coal in South Africa in the fiscal year to June 30, of which about 13 million tons were exported, Nayager said.

The coal-mining company also agreed to sell an additional deposit, with an estimated resource of 300 million tons, to closely held Kuyasa Mining Ltd. to extend the life of its Delmas Colliery in the Mpumalanga province in the northeast of the country. BHP sold the operation to Kuyasa in 2002. Becsa “is not in a position to comment” on the valuation of the deal, Nayager said.

Becsa in January said it will sell some of its undeveloped coal assets to focus on its existing operations.

Pembani owns a 20 percent stake in oil refiner and fuel retailer Engen Ltd., the South African unit of Malaysia’s Petroliam Nasional Bhd., and bought a 51 percent stake in Imbani Coal Ltd. from Anglo American Plc in 2006. It’s also converting debt it is owed by cement maker Afrisam Ltd., South Africa’s second-largest cement maker, into shares, according to data compiled by Bloomberg. Pembani’s company secretary didn’t return calls from Bloomberg News seeking comment.

--With assistance from Ana Monteiro in Johannesburg. Editors: Ana Monteiro, Stephen Cunningham

To contact the reporter on this story: Jana Marais in Johannesburg at jmarais@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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