Strategy and growth

Anglo Coal’s strategy is focused on globalisation to secure a balanced and profitable mix of metallurgical and thermal coal assets, supplying international markets in the Med-Atlantic and Indo-Pacific basins and, where appropriate, selected domestic customers in the country in which the production takes place. This will be achieved by expanding existing assets, acquiring new assets and by forming strategic alliances that facilitate, protect and augment this strategy.

The current and forecast growth rates in the South African economy present numerous opportunities for the coal industry, especially in connection with the supply and demand of electricity. Anglo Coal is evaluating a number of opportunities in order to continue to participate in the domestic electricity supply sector and is currently reviewing these opportunities with potential historically disadvantaged South African partners and Eskom.

In line with its growth strategy, Anglo Coal has recently agreed to acquire 70% of the Foxleigh coal mine joint venture in Queensland, Australia, for $620 million. This adds to Anglo Coal’s existing coal mining operations in the Bowen Basin, one of the world’s premier coal regions. Foxleigh currently produces 2.5 Mtpa of PCI coal for the steelmaking industry. The mine has production capacity of 3.3 Mtpa, which it is expected to reach following completion of rail and port expansion projects. The Foxleigh mine adjoins Anglo Coal’s Capcoal (German Creek) operations and the associated Lake Lindsay mine development, offering potential synergies. The mine and surrounding tenements will be the subject of ongoing exploration and feasibility studies.

The impact of climate change is an area of focus for the sector and Anglo Coal’s strategy is to participate where appropriate to help address the issue of carbon emissions and climate change as the demand for energy continues to grow. Its clean coal energy alliance with Shell, formed last year, is evaluating the Monash Energy project, incorporating carbon capture and storage, in the state of Victoria, Australia.

Anglo Coal is also part of The FutureGen Industrial Alliance, which consists of major energy and mining companies working in partnership with the US Department of Energy (DOE) to design, construct, and operate the world’s first ‘near zero emissions’ coal-fuelled power generation plant. Although in January 2008, the DOE announced an intention to establish an alternative programme, the Alliance intends to continue to work with the Administration, Congress and other stakeholders to advance the project. Anglo Coal is also a member of the World Coal Institute. Through this and several other policy influencing bodies Anglo Coal contributes to promoting the interests and addressing the concerns of the wider coal industry.

While Anglo Coal continues to grow and expand its operations in its existing geographies, it is also looking at potential opportunities in new regions. It has spent $49 million on exploration and new business development activities, investigating resources for thermal and coking coal, coal bed methane and oil sands, mainly looking in southern Africa, China, Australia and Canada. It has conducted advanced resource evaluations of the Xiwan project in China and projects in South Africa, Canada and Australia.