South32 To Pay Clean-up Costs To Close South African Coal Unit Sale

South32 Ltd will provide up to $250 million in funds to smooth the sale of its South African energy coal business to mining group Seriti Resources, the company said on Thursday.

South32 will pay $200 million across a decade to partly fund costs of the environmental clean up of the mines of its South Africa Energy Coal unit once they close, and a $50 million facility to pay for the costs of restructuring some loss-making mining sites, it said.

The deal would allow South32 to reshape its business by exiting the thermal coal sector at a time when many banks and insurers are scaling back financing for the sector because of global warming concerns.

Miners typically guarantee a larger portion of funds to cover rehabilitation costs if a buyer is small, to assure governments they won’t have to foot the bill, said analyst Peter O’Connor, at Australian investment firm Shaw