Sasol may be selling its South Africa coal business

The company would plan to sign a coal-purchase agreement with whoever buys the asset. 

Sasol is planning to sell its South Africa coal-mining business, according to a Bloomberg report.

The company will begin a formal sales process in the coming weeks, people familiar with the matter told Bloomberg. 

The mining business had turnover of R20 billion in the 2018 financial year, according to the company’s financial report, mostly from internal sales to Sasol’s other operations. The company is the world’s biggest manufacturer of fuel from coal, an energy-intensive process. Sasol’s coal mines produce about 40-million tonnes of coal a year, almost entirely for use in its own operations, according to its website.

The company would plan to sign a coal-purchase agreement with whoever buys the asset, said one of the people.

Sasol announced a long-term review process in November 2017 that involves disposing of some assets at prices that ensure value for the company, it said in an e-mailed response to questions, while declining to comment directly on a possible mine sale.

“We do not wish to comment at this stage on which assets have been earmarked for divestment, since they form a part of a disciplined and confidential mergers and acquisition process,” it said. “Sasol will update the market as and when appropriate regarding progress on the asset review process.”

The group is targeting extensive asset disposals across its entire portfolio with a total net asset value of over $2 billion. Sasol has already concluded a number of divestments since 2017 totalling $200 million, and include assets in Malayisia, Germany and the US.