South32 and Seriti entered into exclusive negotiations for the transaction in August after South32 flagged its potential exit last year.
Seriti will pay South32 100 million rand (US$6.77 million) upfront, while South32 will receive 49% of free cashflow between completion and March 2024, capped at 1.5 billion rand.
Seriti is a 91% black-owned and operated South African mining company. A community trust and an employee trust will each hold 5% of SAEC.
"We ran an exhaustive and competitive process and we believe Seriti as an established operator is ideally positioned to unlock the potential of South Africa Energy Coal's existing domestic and export operations, including its significant untapped resource base," South32 CEO Graham Kerr said.
"The sale of our interest in South Africa Energy Coal will enable the business to continue to operate safely and sustainably into the future for the benefit of its employees, customers and local communities, consistent with South Africa's transformation agenda.
"For South32, this marks an important milestone as we continue to reshape our portfolio. Completion of this transaction will substantially reduce our capital intensity, strengthen our balance sheet and will improve the group's operating margin."
SAEC includes four coal mining operations, Khutala Colliery, Klipspruit Colliery, Middelburg Colliery and the Wolvekrans Colliery, as well as three processing plants, producing energy coal for the domestic and export market.
South32 recorded a US$504 million impairment on SAEC in its 2019 financial year results.
Shares in South32 closed 2.7% higher at A$2.65, valuing the company at $13.1 billion.