Seriti Resources, one of the largest suppliers of coal to Eskom, said on Monday that it had struck a R892m deal to acquire a majority stake in Windlab Africa’s wind and solar power assets.
It takes ownership of a pipeline of about 3GW of renewable energy projects to be developed in SA by 2030 at a cost of R75bn. The transaction, through its Seriti Green subsidiary, forms part of the 91% black-owned coal company’s strategy to lower its carbon footprint and become a diversified energy producer.
Seriti acquires a 51% stake in Windlab Africa, with RMB (14.5%), Standard Bank (14.5%) and two individual partners, Peter Venn (15%) and Ntiso Investment Holdings (5%), taking up the remaining stake. Windlab is overseeing 3.5GW of renewable energy projects at different stages of development in SA and East Africa and will continue to be managed by MD Peter Venn and the Windlab Africa team.
Seriti CEO Mike Teke said on Monday that the deal was “a timely and strategic addition to our existing and valuable portfolio of coal assets”. The company produces about 50-million tonnes of coal a year, of which 80% is supplied to Eskom and the rest exported.
Seriti remains “committed to coal”, Teke said, but looking 10 years into the future it realises that coal demand is likely to decline. This acquisition signals a clear intention to “transition into an energy company” that will explore various opportunities in solar, wind and other forms of renewable energy.
“We will continue to run our coal mines to supply Eskom and to export, but we are now in a situation where we are actively looking for opportunities in renewables,” he said.
With this new focus, Seriti wants to play a role in helping SA to “wean itself from load-shedding”.
According to Venn, to compensate for Eskom’s ageing coal-fired generation infrastructure SA will need to add about 50GW of renewable power to the grid over the next 12 years up to 2035, compared with about 6GW of renewables added during the previous 12 years. Of the 3.5GW project pipeline in Windlab’s portfolio acquired by Seriti, 3GW will be deployed in SA — most of it in Mpumalanga, where many of Seriti’s coal assets are located.
“People may think we are crazy to be in Mpumalanga from a wind perspective, but technology has moved along a lot in the past five years [making] Mpumalanga interesting [for wind energy investment].”
This includes, he said, new, larger dimensions for wind turbines. They used to be about 90m tall with a wingspan of about 60m, but now reach 150m in length. “These larger turbines can capture a lot more energy.”
Over the next few years, the company will construct about 1GW of wind farms in Mpumalanga, with the first projects of about 450MW of generation capacity to kick off during the first half of 2023. This will require capital expenditure of about R12bn.
Kwabena Malgas, RMB head of infrastructure equity investments, said one of the reasons the bank came on board is that after 12 years in the renewables space one of the biggest hurdles has been the creation of a “truly SA black-owned independent power producer”.
“For [RMB] to enable Seriti to plug that hole is a massive opportunity,” he said.
In October 2021, JSE-listed coal miner Exxaro and Seriti entered into a memorandum of understanding with Eskom to record their intent to pursue the development of renewable energy solutions for the cost-plus mines supplying Eskom.
This would include investment in renewable energy projects and creating employment and reskilling opportunities for coal mining communities in SA.
According to the memorandum, Seriti wants to reduce its scope 2 carbon emissions by up to 350,000 tonnes a year, about half of its current emissions of 700,000 tonnes.
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