Anglo Coal will shut down its operations in Botswana following a strategic decision by parent company, Anglo American to divest out of all but three commodities.
The global mining giant, which posted a loss of $5.6 billion in 2015 compared with a loss of $2.5 billion the year before, recently announced that it was streamlining its asset portfolio to De Beers, platinum and copper, holding just 16 assets down from 55.
Anglo Coal Botswana (ACB) managing director, Mothibedi Mothibedi told BusinessWeek that it would cease works at its 700 million tonnes Mmamabula coal fields and close offices in Botswana.
“In line with this announcement, Anglo American will be making changes to the way it is structured, which includes the closure of certain offices, including Botswana. This will also see the company winding down all exploration and related activities in Botswana,” he said.
Anglo Coal acquired the two coal blocks in the Mmamabula coalfields in 2013 through a first of its auction of coal blocks.
At that time, Mothibedi said the plan was to carry out mine feasibility, infrastructure and option studies, coal utilisation, market, and environmental and social programme research. The envisaged project for the two blocks was the development of a mine for coal exports as well as for power generation.
The two blocks sit adjacent to the 2.4-billion-tonne Mmamabula east coalfields, which were bought by Indian company, Jindal group from
Anglo also owns a stake in Morupule Coal Mine (MCM) by virtue of being a shareholder in Debswana. Following the closure of Botswana coal operations, Anglo’s presence in the country will remain in the diamond business, where the company owns 85 percent of De Beers.
According to Mothibedi, at group level, Anglo American will manage the remaining bulk commodity assets including coal and iron ore within a dedicated unit to improve performance and value, while considering appropriate timing for sale.
Anglo outlined plans in December last year to restructure its portfolio to between 20 and 25 assets, down from 55 and cutting its workforce to about 50,000 people, an 85,000 reduction.
It plans to raise between $3 billion and $4 billion from asset sales to bring net debt to $10bn or less this year.
Ratings agency, Moody’s recently cut Anglo’s credit rating to junk.
“The company now faces a higher business risk due to deterioration in commodities market conditions, and a longer and more uncertain de-leveraging period than previously expected,” Moody’s said in a statement, adding there was deep concern about Anglo’s ability to raise funds by selling assets in a depressed global commodity market.