Tag Archives: Mark Cutifani

Thungela to acquire Anglo American’s South African thermal coal operations

Anglo American has agreed to demerge its thermal coal operations in South Africa to a new holding company called Thungela Resources Limited.

The separation deal, which is subject to the approval of Anglo American’s shareholders on May 5, 2021, will be implemented through the transfer of Anglo’s South Africa thermal coal operations to Thungela, the demerger of the Thungela shares to Anglo American shareholders and the primary listing of Thungela’s shares on the Johannesburg Stock Exchange (JSE) and standard listing on the London Stock Exchange (LSE).

Thungela had 16.5 Mt of attributable export production to its name in 2020, with its operations close to an established rail network with secure access to export markets via the Richards Bay Coal Terminal. It has 137 Mt of reserves and 756 Mt of resources, along with seven operations (four open-pit and three underground).

Anglo’s operations, meanwhile, are derived from three wholly owned and operated mines – Goedehoop, Greenside and Khwezela; Zibulo (73% owned, pictured); as well as from Mafube colliery, a 50:50 joint operation. It supplies around 19 Mt/y of export thermal coal from these mines.

Mark Cutifani, Chief Executive of Anglo American, said: “Anglo American has been pursuing a responsible transition away from thermal coal for a number of years now. 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.”

He added: “We are confident that Thungela will be a responsible steward of our thermal coal assets in South Africa, benefiting from an experienced and diverse management team and board. While representing just a small proportion of Anglo American today, we are laying the foundation for South Africa’s leading coal business, setting it up for success to deliver value for all its stakeholders. Looking forward, we believe the prospects for long-term value delivery are greatest as two standalone businesses, each with their own strategy and access to capital.”

July Ndlovu, CEO of Thungela, said: “Thungela is a leading South African producer of high quality, low cost export thermal coal, well positioned to benefit from improved market conditions, and providing a reliable and affordable energy source to our customers mainly in developing economies. We have significantly repositioned and upgraded our portfolio in recent years into a highly competitive producer of export product, with established access to world-class export infrastructure.

“As an independent business we will continue to contribute significantly to our host communities and South Africa’s development objectives. As part of our commitment to creating an enduring positive legacy, we are establishing an employee partnership plan and a community partnership plan, with each holding a 5% interest in the Thungela thermal coal operations in South Africa, thereby enabling employees and communities to share in the financial value that we generate.”

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 and, following the implementation of the proposed demerger, to either retain, increase or decrease their interests in Thungela, Anglo explained. The proposal also allows Thungela to attract new shareholders and to access new sources of capital as an independent company offering direct exposure to thermal coal.

Anglo American says it is committed to setting up Thungela as a sustainable standalone business, including by providing an initial cash injection of ZAR2.5 billion (~$170 million) and further contingent capital support until the end of 2022 in the event of thermal coal prices in South African rand falling below a certain threshold.

Following the implementation of the proposed demerger, and in line with Anglo American’s responsible approach, Anglo American’s marketing business will continue to support Thungela in the sale and marketing of its products for a three-year period with an additional six-month transitional period thereafter, the company said.

“This transitionary arrangement ensures that customers receive a consistent service and supply of thermal coal while Thungela concentrates on enhancing the performance of its operations while continuing to receive optimal value for its products in the market,” Anglo said. “The three-year term, and the additional six-month roll-off period, also provide time for Thungela to build its own global marketing capabilities should it choose to do so.”

For the proposed demerger to be implemented, Anglo American shareholder approval will be sought at a general meeting and court meeting, both expected to be held on May 5 following Anglo American’s Annual General Meeting. If it is approved, it is expected the demerger would be effective on June 4, 2021, with Thungela’s shares being listed and admitted to trading on the JSE and LSE on June 7, 2021.

Following completion of the proposed demerger, 100% of the issued share capital of Thungela will be held by Anglo American shareholders who will each receive one Thungela share for every 10 Anglo American shares they hold. Each Anglo American shareholder will also retain their existing shareholding in Anglo American. Thungela will hold 90% of the thermal coal operations in South Africa with the remaining 10% held collectively by the employee partnership plan and the community partnership plan.

Anglo American pledges further investment in Woodsmith polyhalite project

Anglo American is to invest more money in the construction of its Woodsmith polyhalite mine in Yorkshire, UK, in 2021, following sound progress on the development in 2020.

In an investor presentation this week, Chief Executive, Mark Cutifani, announced the company will invest $500 million in Woodsmith next year, an increase on the $300 million it had previously committed to spending.

The improved funding commitment was, he said, a reflection of the good progress that was “ahead of expectations” and “to ensure that the critical path elements continue to proceed at the optimal pace and sequence”.

It was also revealed that the first drive of the 37 km tunnel from Wilton on Teesside was nearing the 12 km mark and that good progress was being made on preparing for further mineshaft sinking operations at the Woodsmith Mine site near Whitby, which are expected to begin in the new year.

Simon Carter, Chief Development Officer on the Woodsmith Project, said: “It’s been an incredibly challenging and busy time on the project recently, not least because of the adaptations and safety measures we’ve introduced to make sure that we can work safely during COVID-19. But, I am incredibly proud that the whole team has pulled together and enabled us to make such good progress. I’m delighted that we have been able to buck the trend of many businesses and expanded our workforce, providing important opportunities for people in the region in these difficult times.”

Anglo American has hired around 150 new people since it launched a recruitment drive in the autumn, with around 60 more expected to be hired in the coming weeks. Almost three quarters of these new workers have been hired from areas local to the project in North Yorkshire and Teesside.

The announcement of increased funding is expected to allow the project to recruit an additional 130 construction workers and dozens of additional management and administration roles next year, which will increase the size of the workforce to around 1,400.

The project involves the sinking of two mineshafts with Herrenknecht’s Shaft Boring Roadheader technology into the polyhalite ore over 1.6 km beneath the surface near Whitby, and the construction of a 37 km long tunnel to a new processing and shipping facility on Teesside.

When the mine is complete, extracted polyhalite ore will be hoisted up the mineshaft and transported underground on a conveyor belt, avoiding any impact on the countryside above, the company says. From there, it will be shipped around the world and sold to farmers as a natural low carbon fertiliser, certified for organic use.

Anglo takes on responsible mining standards at Unki platinum mine

Anglo American says its Unki platinum mine in Zimbabwe has become the first operation to publicly commit to be independently audited against the Initiative for Responsible Mining Assurance’s (IRMA) ‘Standard for Responsible Mining’.

IRMA’s Standard for Responsible Mining has been developed over 10 years through a public consultation process with more than 100 different individuals and organisations, including mining companies, customers and the ultimate downstream users of mined products, non-governmental organisations, labour unions, and communities.

An initial self-assessment was completed by Unki ahead of the independent on-site audit and, according to Anglo, the operation performed well against the 26 areas covered by the Standard for Responsible Mining, including working conditions, human rights, community and stakeholder engagement, environmental impact, and planning and financing reclamation and closure.

Mark Cutifani, Chief Executive of Anglo American, said the company had a longstanding commitment as a leader in responsible mining, with numerous examples of its progressive business decisions across many decades. “We are pleased that Unki will be the first mine in the world to publicly commit to a third-party audit to determine its performance against IRMA’s Standard for Responsible Mining,” he said. “As our customers and end consumers who rely on our metals and minerals rightly expect the highest standards of ethical production, we will be putting all our managed mines through such rigorous certification processes by 2025.”

Aimee Boulanger, Executive Director of IRMA, said while IRMA is a voluntary certification system meant to complement strong laws and government oversight, it is also the world’s first and only global definition of what constitutes leading practices in social and environmental responsibility for large-scale mining operations developed through consultation with a range of stakeholders.

“It is the product of 10 years of collaboration between our stakeholders that seeks to emulate for mining what has been done with certification programs in fairtrade agriculture, responsible forestry and sustainable fisheries, as examples,” she said.

“We are extremely pleased to see Anglo American’s Unki mine take the lead and begin the third-party certification process. We hope that this paves the way for others across the industry to make a similar commitment.”

Chris Griffith, CEO of Anglo American Platinum, said the IRMA self-assessment tool had provided the business with a valuable opportunity to measure the performance at Unki mine against international best practice on a wide range of environmental and societal factors. “We are immensely proud of the work the team has been doing at Unki on responsible and sustainable mining, and we look forward to continue leading the way for our other mining operations.”

Unki is the first of many Anglo American operations to be measured against the IRMA standard, in line with the commitment in our Sustainable Mining Plan to have all of our operations assessed against credible responsible mining standards by 2025.

Other Anglo American operations currently completing the IRMA self-assessment stage include the Barro Alto nickel operation in Brazil and the Amandelbult PGM operation in South Africa.

Unki has not yet been independently assessed against the standard nor achieved a level of recognition at the time of this announcement, Anglo said.

Anglo American, Rio Tinto back World Bank’s clean technology developments

Anglo American and Rio Tinto have committed to the World Bank’s Climate-Smart Mining initiative by becoming founding donors to the Climate-Smart Mining Facility.

The Climate-Smart Mining Facility is the first-ever fund dedicated to making mining for metals and minerals a more sustainable practice that complements the global energy transition, according to Anglo.

Building on the World Bank’s initial $2 million investment, Anglo American and Rio have joined governments (the German government being one) as a donor. Anglo said it would provide $1 million to the facility over the next five years.

“The facility’s work will support the sustainable extraction and processing of mining products used in developing clean energy technologies, such as copper used in energy storage and electric vehicles,” Anglo said. “The fund will also work with governments and operators in developing countries to establish strategies for sustainable mining operations and legal frameworks that promote smart mining.”

Anglo American said it shares the World Bank’s view that the energy transition will be mineral-intensive, creating economic opportunities for resource-rich countries and the mining sector.

Mark Cutifani, Chief Executive of Anglo American, said: “To have real impact we must work together with governments and operators to bring changes. That is why we are supporting the World Bank with this facility, to provide funds that can transform our industry for the future.

“Mining cannot continue its long path of simply scaling up to supply what the world needs. We need to do things in dramatically different ways if we are to transform our footprint and be valued by all our stakeholders. Our first responsibility is to reduce our energy and water usage, and our emissions.

“At Anglo American, we have set ourselves on a journey to carbon neutrality operationally, with our 2020 and 2030 targets as staging posts. Our FutureSmart Mining™ technologies will be a key driver of this.”

Rio Tinto CEO, J-S Jacques, said: “The transition to clean energy solutions presents both a significant opportunity and responsibility for the mining industry, as it provides the materials that make these technologies possible.

“We want to be part of the solution on climate change and the best solutions will come from innovative partnerships across competitors, governments and institutions. Our collaboration with the World Bank and many others is aimed at making a real difference by promoting sustainable practices across our industry. We look forward to supporting the Climate-Smart Mining Facility by contributing not just funding but also expertise as a leader in sustainable mining practices.”

The World Bank said the facility focuses on “helping resource-rich developing countries benefit from the increasing demand for minerals and metals, while ensuring the mining sector is managed in a way that minimises the environmental and climate footprint”.

The facility, which supports the sustainable extraction and processing of minerals and metals used in clean energy technologies, such as wind, solar power, and batteries for energy storage and electric vehicles, will also assist governments to build a robust policy, regulatory and legal framework that promotes climate-smart mining and creates an enabling environment for private capital, the World Bank said.

Projects may include:

  • Supporting the integration of renewable energy into mining operations, given that the mining sector accounts for up to 11% of global energy use and that mining operations in remote areas often rely on diesel or coal;
  • Supporting the strategic use of geological data for a better understanding of “strategic mineral” endowments;
  • Forest-smart mining: preventing deforestation and supporting sustainable land-use practices; repurposing mine sites, and;
  • Recycling of minerals: supporting developing countries to take a circular economy approach and reuse minerals in a way that respects the environment.

Riccardo Puliti, Senior Director and Head of the Energy and Extractives Global Practice at the World Bank, said: “The World Bank supports a low-carbon transition where mining is climate-smart and value chains are sustainable and green. Developing countries can play a leading role in this transition: developing strategic minerals in a way that respects communities, ecosystems and the environment. Countries with strategic minerals have a real opportunity to benefit from the global shift to clean energy.”

The World Bank is targeting a total investment of $50 million, to be deployed over a five-year timeframe.

Anglo resumes operations at Minas-Rio iron ore mine

Anglo American has resumed operations at its Minas-Rio iron ore mine in Brazil almost nine months since it suspended activities following the discovery of two leaks along the 529 km slurry pipeline.

The restart of the integrated iron ore operation follows a technical inspection of the pipeline that carries the iron ore in slurry form from the mine to the port, the repair of certain sections of the pipeline and receipt of the appropriate regulatory approvals, Anglo said.

“The inspection of the entire pipeline by specialist pipeline inspection devices (PIGs), and the analysis of the collected data by expert teams drawn from Brazil and internationally, confirmed the pipeline’s integrity,” the company added.

As part of Anglo’s “responsible approach” to the leaks, it has pre-emptively replaced a 4 km stretch of pipeline where the two leaks of non-hazardous material occurred, as well as a small number of individual sections of pipe where the PIGs detected minor anomalies below the normal threshold for intervention. It also shortened the intervals for future inspections by PIGs from five years to two years to ensure the long-term integrity of the pipeline, while also fitting a fibre-optic system of acoustic, temperature and vibration sensors along critical sections of the pipeline to monitor performance.

Mark Cutifani, Chief Executive of Anglo American, said: “The protection of the natural environment surrounding local communities and the overall integrity of the pipeline have formed the focus of our work to restart Minas-Rio and meet our obligations to our host communities, employees, customers and other stakeholders.”

Cutifani said the majority of Minas-Rio employees have been deployed across its operations in Brazil during this year, including on the construction work required to secure its Step 3 operating licence for Minas-Rio. Safety and other refresher training has been under way since early November in preparation for the restart, he added.

Anglo American expects the operation to ramp up to 1.2 Mt/mth (wet) and to produce approximately 16-19 Mt (wet) of iron ore in 2019, with the expectation that the Step 3 licences are received as planned.

Anglo’s Brazil chief executive, Ruben Fernandes, told Reuters earlier this year that the company expects to hit the 26.5 Mt/y (wet) nameplate capacity some time in 2021.