Seriti Resources, one of the largest suppliers of coal to Eskom, said on Thursday that it has concluded a R892m deal to acquire a majority stake in Windlab Africa’s portfolio of 4GW wind and solar power assets.
The acquisition was made through its subsidiary Seriti Green, “marking a significant step in the development of the company’s renewable energy business”, the company said.
Seriti announced in August that it would acquire a majority interest in Windlab’s SA and East Africa businesses (together, Windlab Africa). The conclusion of the Windlab East Africa portion of the transaction remains subject to antitrust approval from the Tanzanian authorities.
Seriti CEO Mike Teke told Business Day that the deal would support the business’ objective of lowering its carbon footprint.
As part of the deal, it takes ownership of a pipeline of about 4GW of renewable energy projects (equal to roughly 10% of Eskom’s total coal-fired generation capacity), most of which are to be developed in SA by 2030 at an estimated cost of R75bn.
The inclusion of renewable energy into Seriti’s existing portfolio of coal assets will offer long-term financial stability and diversification, provide a solution to Seriti’s own power needs and provide opportunities to help secure the country’s power needs, the company said in a statement.
Seriti would originally have acquired a 51% stake in Windlab Africa, but after one of the partners to the transaction, Ntiso Investment Holdings, pulled out, Seriti’s stake increased to a 54.19% controlling interest. The other partners are VennEnergy (15%), RMB (15.41%) and Standard Bank (15.41%).
Windlab will continue to be managed by MD Peter Venn and the Windlab Africa team.
Seriti produces about 50-million tonnes of coal a year, of which about 80% is supplied to Eskom and the rest exported.
Teke said the largest portion of 4GW projects will be in SA — most of them in Mpumalanga, where many of Seriti’s coal assets are located. These projects will supply the company with renewable energy to power its own operations.
Seriti uses 750GWh of electricity to mine coal. In line with the commitments made in the agreement signed in October 2021 with Eskom and Exxaro, it will start using renewable wind and solar energy in its facilities through the signing of power purchase agreements for the procurement of renewable energy in 2023.
The company estimates that about 50% of the business’ power needs could ultimately be supplied by Seriti Green’s current pipeline of renewable energy projects.
“We are going to be looking at the Mpumalanga area and the key off-taker is going to be Seriti itself. We will be signing the PPA in February next year and they want to start building wind farms by April,” said Teke.
They are looking at different land parcels on which to develop wind farms. Some of the land is owned by Seriti, but they are also looking at land in Mpumalanga owned by municipalities and by Eskom.
Teke said Seriti’s investment in renewable energy will not detract it from developing its coal business, and their interests in renewables “will not reach the level where coal is right now, but it will catch up over time”.
“Right now, our strategy is clear, we’re not selling [coal] assets, and the assets that we have that are not developed yet will be developed.”
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