South Africa’s Competition Commission has recommended the Competition Tribunal approve Tegeta Exploration & Resources’ acquisition of Glencore’s Optimum Holdings, including the Optimum coal mine, the Optimum coal terminal and the Koornfontein mines, for Rand 2.15 billion ($136 million) provided no employees are retrenched as a result.
The commission said in a statement Thursday it had found the acquisition “unlikely to substantially prevent or lessen competition in the thermal coal market,” adding that the business would face competition from larger rivals, making them “credible alternative suppliers of thermal coal that will continue to constrain the merging parties post-merger.”
According to a separate statement from Nazeem Howa, the chief executive officer of Oakbay Investments, partial owner of Tegeta with Mabangela Investment, the acquisition has prevented the liquidation of the mine, which would have impacted the jobs of 3,000 mineworkers, adding that the new owner would preserve these jobs.
South Africa’s National Union of Mineworkers welcomed the recommendation to retain jobs at Optimum, saying it was “extremely worried about the bloodbath of job losses in the mining industry.”
Optimum was placed under business rescue proceedings in August due to the mine suffering financial difficulties stemming from a loss-making 25-year supply agreement signed with state-owned utility Eskom in 1993 which Eskom refused to renegotiate.
Joint business rescue practitioners (BRPs) Piers Marsden and Peter van den Steen conditionally agreed to sell the assets to Tegeta in December last year after the company said it would honor the existing 5.5 million mt/year coal supply agreement with Eskom.
Oakbay is owned by the Gupta family — which has ties to President Jacob Zuma — while Duduzane Zuma, the president’s son, is a stakeholder in Mabangela.
South African media also reported that the country’s Minister of Mines Mosebenzi Zwane met with Glencore CEO Ivan Glasenberg last year to advance the deal.
The BRPs responded to media reports by noting that Tegeta’s offer had provided “the most compelling value for all stakeholders.” Tegeta holds two mining rights for coal — Brakfontein and the Brakfontein Extension — in the Delmas area and already supplies Eskom with 2.4 million mt/year of coal after winning a Rand 4 billion 10-year coal supply contract in September for the Majuba power station in Mpumalanga.
SOURCE: http://www.platts.com/
–Jacqueline Holman, [email protected]
–Edited by James Leech, [email protected]