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
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,