JOHANNESBURG (Reuters) - Glencore (L:GLEN) has provisionally agreed to sell its troubled South African coal mine for 2.15 billion rand ($136 million), narrowly avoiding closing the operation and saving hundreds of jobs, the unit's business rescue practitioners said on Friday.
The Optimum Coal Mine went into business rescue, or protection from creditors, in August after a slide in coal prices meant it was selling coal to power utility Eskom [ESCJ.UL], its main customer, for less than the cost of production.
It is one of many Glencore-owned assets that have been hit by the slump in commodities prices, forcing the Swiss-based mining and trading company to revamp its global business.
South Africa's business rescue law, similar to chapter 11 in the United States, allows a financially distressed company to temporarily delay creditors' claims against it or its assets.
Proceeds from the planned sale of Optimum to South Africa's Tegeta Exploration and Resources will be used to pay down part of Optimum's 2.55 billion rand debt and Glencore will pay the balance, the practitioners said in a statement.
The sale saved 500 jobs that were potentially going to be cut with the closure of the mine.
Optimum produces 10 million tonnes of coal annually, half of which is sold to Eskom.
The deal is subject to approval from the mines ministry, the competition watchdog and the final adoption of a business rescue plan for Optimum.
The deal will be effective from Jan. 1 with the business rescue proceedings due to be completed by the end of February 2016.
Tageta owns two mining rights for coal and has prospecting rights in four provinces in South Africa.