Anglo-American has sold its KwaZulu-Natal coal assets to black-controlled Leeuw Mining, retaining only a 10% interest in more than a hundred million tons of reserves.

The deal comes ahead of a long-awaited new law designed to boost black participation in an industry still dominated by white owners.

A leaked draft copy of the law revealed the South African government was considering a drastic overhaul of the mining industry.

The government and mining firms are still hammering out key targets for transferring assets to black ownership.

Popular demands

Alan Cook, a mining analyst at Rice Rinaldi Securities in Johannesburg, says the Anglo-American deal should be seen as part of an inevitable process.

Earlier this month, the African National Congress (ANC) warned the government it must step up its black economic empowerment initiative to prevent a popular revolt.

The ANC has called on the South African government to establish a national empowerment fund, financed through a mix of taxes and money from the private sector.

The mining industry is a mainstay of South Africa's economy, and is valued at 600bn rand ($60bn; £39bn).

The financial details of the deal were not disclosed.