Op­ti­mum

Glen­core is said to be sell­ing its R3.7m-a-day loss­mak­ing coal mine, and staff are pin­ning their hopes on a new buyer that could save jobs

CityPress - - Busi­ness - SU­SAN COM­RIE in­ves­ti­ga­tions@city­press.co.za

The in­flu­en­tial Gupta fam­ily has emerged as a pos­si­ble buyer of the trou­bled Mpumalanga mine Op­ti­mum Coal. City Press has con­firmed through var­i­ous sources that due dili­gence is un­der way at Op­ti­mum to de­ter­mine if one of two Gup­taowned com­pa­nies, Oak­bay In­vest­ments or Oak­bay Re­sources, will buy the mine, which has a con­tract to sup­ply 5.5 mil­lion tons of coal a year to Eskom’s Hen­d­rina Power Sta­tion.

Tegeta Re­sources, a com­pany partly-owned by the Gup­tas’ Oak­bay In­vest­ments, al­ready sup­plies Eskom with 2.4 mil­lion tons of coal a year.

Op­ti­mum, which is ma­jor­ity-owned by multi­na­tional min­ing gi­ant Glen­core, was placed into busi­ness res­cue in Au­gust af­ter Eskom re­fused to rene­go­ti­ate a crip­pling coal-sup­ply con­tract that re­sults in Op­ti­mum los­ing about R3.7 mil­lion a day.

Spec­u­la­tion was rife this week about whether Op­ti­mum would be sold, and to whom, af­ter busi­ness res­cue prac­ti­tion­ers con­firmed “there was buy­ing in­ter­est” and “one spe­cific op­tion” was be­ing pur­sued.

City Press sent de­tailed ques­tions to both Oak­bay Re­sources and Oak­bay In­vest­ments, but de­spite nu­mer­ous fol­low-ups over more than a week, nei­ther com­pany of­fered any re­sponse.

Glen­core also de­clined to com­ment on any po­ten­tial buy­out by Oak­bay, while a spokesper­son for the busi­ness res­cue prac­ti­tion­ers said all they could say at this stage was that they “are still con­sid­er­ing all op­tions avail­able that are ac­cept­able to Eskom and the other stake­hold­ers”.

For months there has been spec­u­la­tion that Oak­bay, as well as sev­eral other min­ing com­pa­nies, were show­ing in­ter­est in Op­ti­mum.

“[The Gup­tasï showed an in­ter­est long ago, and they kept quiet up un­til the re­trench­ments. They’ve just resur­faced,” an Op­ti­mum em­ployee told City Press. (Em­ploy­ees have been warned not to speak to the me­dia about ne­go­ti­a­tions at Op­ti­mum. Those who agreed to speak to City Press did so only on con­di­tion that their iden­ti­ties be pro­tected.)

“They’ve done a desk­top due dili­gence, and as of [Novem­ber 16] are in the mine,” said the em­ployee.

Three sources con­firmed that a large del­e­ga­tion ar­rived at Op­ti­mum Coal in the tiny town of Pullen’s Hope in Mpumalanga last month, fol­lowed by a smaller team to carry out what was be­lieved to be a 30-day hands-on in­spec­tion of the mine.

“We were told by the busi­ness res­cue guys, ‘There’s a com­pany’ – they didn’t di­vulge the name – ‘and those guys are go­ing to come to do a due dili­gence,’” said the em­ployee. “On Mon­day, there were about 35. The first thing they did was to put them in a bus to go and see all around the mine. From Tues­day, they got into busi­ness.”

City Press vis­ited the mine two weeks ago where a con­trac­tor con­firmed that the del­e­ga­tion that had vis­ited the mine was from Oak­bay.

“They haven’t come for­mally to say the po­ten­tial buyer is the Gup­tas,” said a sec­ond em­ployee.

“We had to find out in our own way,” the first em­ployee added.

“They are keep­ing ev­ery­thing quiet … but we are told they seem to be im­pressed.

A R4.1 bil­lion hole

Op­ti­mum Coal is con­tracted in terms of a 1993 agree­ment to de­liver coal to Eskom un­til the end of 2018 at roughly R150 per ton.

Although Eskom coal con­tracts are usu­ally sought af­ter,

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