Exxaro Resources Ltd. agreed to buy Total SA’s South African coal unit, the fifth-largest producer in the country, to gain expanded reserves and rights at the main export harbor for the fuel.
Exxaro will acquire 100% of Total Coal South Africa Pty Ltd., known as TCSA, and settle all outstanding loan claims, the Pretoria-based company said in a statement today. The $472million cost of the deal includes the purchase of shares and an $85.5 million loan consideration.
The transaction includes TCSA’s export rights at the Richards Bay Coal Terminal, the world’s biggest. For Total, the deal is the latest in a series of disposals as France’s largest oil company focuses on core activities. By the end of May, Total had sold about $16billion of assets under a program that started in 2012.
TCSA controls the Dorstfontein and Forzando mines, east of Johannesburg in Mpumalanga province, with sales of about 4.5 million metric tons a year, it said in the statement. Most of the production is exported, mainly to India and China.
“This sale is part of the Group’s 2012-14 asset sale program and is in line with Total’s objectives to focus on its core activities and to actively manage its portfolio,” Philippe Sauquet, president of gas and power at Total, said in a company statement.
Exxaro operates seven mines that generate almost 40 million tons annually. Its largest customer is state-owned utility Eskom Holdings SOC Ltd., which relies on the fuel for 85 percent of generation and is struggling to meet demand in the continent’s second-biggest economy.
Exxaro last month said it approved a new 3.8billion-rand ($360million) mine, the Belfast project, that will produce coal for export and to supply one of Eskom’s plants.
The fourth-largest exporter of coal from South Africa will gain an additional 4.1 million tons of shipping capacity from the Total deal. “Exxaro currently leases entitlement from other operators in the industry in order to meet its export requirements. The acquisition will allow Exxaro to utilize Exxaro-controlled entitlement to meet its export requirements in future.”
Total started operations last week to drill the first exploration well for oil and gas in the deep offshore Outeniqua Basin.
“Total remains committed to South Africa, through its activities in marketing and refining, solar and deep offshore exploration,” Sauquet said.
