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Anglo American to demerge its thermal coal business

Anglo American has today announced plans to list its thermal coal assets in South Africa as the company comes under increasing pressure to improve its environmental footprint.

The mining company is to separate its assets into a new holding company, Thungela Resources Limited. The new company is to have a dual-listing, the primary listing will be on the Johannesburg Stock Exchange and a second listing on the London Stock Exchange.

“Anglo American PLC (LON:AAL) has been pursuing a responsible transition away from thermal coal for a number of years now,” said Anglo American’s CEO Mark Cutifani. “As the world transitions towards a low carbon economy, we must continue to act responsibly - bringing our employees, shareholders, host communities, host governments and customers along with us.

Our proposed demerger of what are precious natural resources for South Africa, allows us to do exactly that.”

ESG Investing

Environmental, Social and Governance investing has taken a leap forward in recent years with asset managers and funds seeking more investments that have a positive long-term impact on society. Thermal coal production is not an industry that would fit in with many investors and other mining companies have also announced plans or have already sold off their coal assets. Rio Tinto (LON:RIO) exited its coal mining business in 2018.

“The proposed demerger recognises the diverse range of views held by Anglo American's shareholders in relation to thermal coal and therefore provides Anglo American's shareholders, including those with specified investment criteria, with the choice to act on such views,” the company said in a statement.

Financial Details

Anglo American said it will provide an initial cash injection of around $170mln and further contingent capital support until the end of 2022 in the event of thermal coal prices in South Africa falling below a certain threshold.

If the demerger is approved at the company’s AGM in May, it is expected the demerger will be effective from June 4th 2021 with shares to begin trading from June 7th on the two exchanges.

Anglo American shareholders will each receive one Thungela share for every ten Anglo American shares they hold following completion of the proposed demerger.

Last year, Thungela had 16.5mln tonnes of attributable export saleable production of thermal coal and currently has assets worth just under $1.3bln.

At 09:30GMT, Anglo American shares were trading 1.6% higher at 3,032.90p.

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