Cape Town — Anglo American's wholly owned coal subsidiary Anglo Coal SA has taken another step towards meeting government's economic empowerment requirements with the creation of a R7bn black-empowered coal firm.

The group said yesterday it had formed a new company, Anglo Inyosi Coal, which would be 27% owned by a consortium of black women, business people and communities. An employee share ownership scheme would also be introduced this year.

However, it was unclear to what extent the move would enable Anglo Coal to meet the requirements of the mining charter, which is a precondition to securing mining licences.

The charter requires 15% black equity ownership by 2009 and 26% by 2014. Asked at a press conference about Anglo Coal's empowerment status after this deal, Anglo American SA acting CEO Philip Baum said Anglo Coal had engaged with the minerals and energy department on it.

The deal was based on production volumes and it would be put together with other empowerment transactions and goals Anglo Coal had achieved and taken to the department.

The department did not commit itself in advance to approvals, he said.

Baum was referring to Anglo Coal's involvement in establishing Eyesizwe Coal and Exxaro Resources, as well as its R1,7bn of procurement spending last year and achievement of milestones in black management and employment of women in mining.

Anglo Inyosi Coal will own the Kriel colliery, which produces 10,5-million tons of coal a year, as well as four undeveloped coal properties: New Largo, Elders, Zondagsfontein and Heidelberg.

The undeveloped coal properties can potentially produce another 38-million tons of coal a year, mostly for the domestic market. The total resources of the new company are 4,1-billion tons of coal.

Anglo Inyosi Coal will pay Anglo Coal R7bn for these assets through R68m in share funding by Anglo Coal, R25m sharefunding by Inyosi and a R6,9bn loan from Anglo American.

Anglo Coal SA CEO Ben Magara said Anglo had looked at the financing offered and decided that the best option was for it to extend the loan itself.

The interest rate was within the norms for empowerment deals and not material to the Anglo group's earnings.

The mine properties have a R15bn project pipeline, which will be funded by Anglo Coal.

Under the deal, R5m a year will be paid by Anglo Inyosi Coal to broad-based beneficiaries with another R1m to fund administration costs.

The Inyosi consortium is represented one-third by the Lithemba Consortium, 100% owned by historically disadvantaged women; one-third by Pamodzi Coal, a newly created firm within Pamodzi Investment Holdings; 19% by WDB Investment Holdings, a women's financing group, and 15% by communities near the mines.