Zuma Jnr ben­e­fits from coal deals

CityPress - - News - SU­SAN COM­RIE su­san.com­rie@city­press.co.za

If the R2.1 bil­lion deal to buy Op­ti­mum Coal is ap­proved, Pres­i­dent Ja­cob Zuma’s son Duduzane will have be­come the ben­e­fi­ciary of no fewer than four Eskom coal con­tracts.

Just two days af­ter Eco­nomic Free­dom Fight­ers leader Julius Malema coined the catchy new phrase “Zup­tas” for the com­mer­cial ro­mance be­tween the Zuma and Gupta fam­i­lies, the Com­pe­ti­tion Com­mis­sion re­vealed that Duduzane Zuma is one of the buy­ers of the Mpumalanga coal mine, along with the Gup­tas’ Oak­bay In­vest­ments.

In De­cem­ber, an an­nounce­ment was made that Tegeta Ex­plo­ration and Re­sources would buy sev­eral Op­ti­mum Coal as­sets from Glen­core.

At the time, it was well known that the Gupta fam­ily held a stake in Tegeta – what was not known un­til Thurs­day was that the other share­holder was Maben­gela In­vest­ments, whose two di­rec­tors are Duduzane Zuma and Ra­jesh Gupta.

Al­though it has been widely re­ported that Duduzane holds a stake in Maben­gela, be­ing listed as a di­rec­tor does not nec­es­sar­ily mean that he is also a share­holder. City Press’ at­tempts to con­firm this went unan­swered.

Tegeta has been shy about dis­clos­ing de­tails of the com­pany’s share­hold­ing and fi­nan­cials.

Last year, Tegeta chief ex­ec­u­tive Nazeem Howa hit back at a Sun­day Times ar­ti­cle that claimed that state power util­ity Eskom had bent the rules to hand the Gup­tas a lu­cra­tive R4 bil­lion Eskom coal con­tract through Tegeta. “Oak­bay In­vest­ments, the fam­ily’s pri­mary ve­hi­cle, holds less than 50% of the share­hold­ing in Tegeta, so to place the Gup­tas in the head­line is once again mis­chievous and mis­lead­ing,” he said. (Both Howa and Eskom also de­nied that Tegeta had re­ceived pref­er­en­tial treat­ment.)

Tegeta’s con­tract, which be­gan in April, is for 2.4 mil­lion tons of coal a year, sup­plied to Eskom’s Ma­juba Power Sta­tion from their Brak­fontein Col­liery. The ac­qui­si­tion of Op­ti­mum will add three more Eskom con­tracts to their books:

A 5.5 mil­lion-tons-per-year con­tract to sup­ply Eskom’s Hen­d­rina Power Sta­tion from the Op­ti­mum Coal Mine at R150 a ton un­til 2018;

A short-term con­tract to sup­ply an es­ti­mated 50 000 tons of coal a month to Eskom’s Arnot Power Sta­tion from the Op­ti­mum Coal Mine at R406 a ton, which should run un­til March;

A short-term con­tract to sup­ply an es­ti­mated 166 000 tons of coal a month to Eskom’s Ko­mati Power Sta­tion from Op­ti­mum’s Koorn­fontein mine for an undis­closed price. The Koorn­fontein con­tract was due to ex­pire at the end of De­cem­ber last year, but it was qui­etly ex­tended by Eskom un­til at least the end of this month.

Asked to com­ment on th­ese con­tracts, Howa said: “It is worth not­ing that, at its max­i­mum, Tegeta’s con­tri­bu­tion to Eskom’s coal sup­ply will only be 5%. This is in con­trast to the big five [com­pa­nies], who sup­ply more than 80%.” Last year, Eskom bought 119 mil­lion tons of coal. As Howa points out, the ma­jor­ity comes from ma­jor min­ing com­pa­nies such as An­glo Amer­i­can, Exxaro and South32 – ac­cord­ing to a 2014 re­port, th­ese three com­pa­nies alone con­trib­uted 93 mil­lion tons of coal to Eskom.

How­ever, Eskom’s pol­icy of only sign­ing new sup­ply con­tracts with ma­jor­ity black-owned mines has helped new sup­pli­ers, in­clud­ing Tegeta, to get a foot in the door.

Among the smaller play­ers, Ichor Coal has some of the most am­bi­tious ex­pan­sion plans. Chaired by for­mer ArcelorMit­tal CEO and JSE chair Nonku­l­uleko Nyem­bez­iHeita, Ichor said last year it was pro­duc­ing about 2 mil­lion tons of coal a year, but was hop­ing to ex­pand pro­duc­tion to 15 mil­lion tons by 2017.

Com­pared with the ma­jors, Tegeta’s po­ten­tial eight mil­lion tons a year is a small stake (6.6% of Eskom’s to­tal sup­ply), but among the new en­trants, this makes them a sig­nif­i­cant force.

How­ever, a cir­cu­lar to share­hold­ers re­leased by the Gup­tas’ listed com­pany Oak­bay Re­sources and En­ergy last month, shows that Tegeta has plans to sell their Brak­fontein Col­liery just be­fore they ac­quire Op­ti­mum.

If ap­proved by share­hold­ers, the deal, worth R2.1 bil­lion, will see Tegeta sell­ing Brak­fontein and the 2.4 mil­lion-tons-per-year Eskom con­tract to Oak­bay Re­sources and En­ergy, which is 64% owned by Atul Gupta.

The dis­clo­sure of Zuma’s stake in the Op­ti­mum deal adds to ac­cu­sa­tions that have al­ready been made that the Gup­tas’ political in­flu­ence has been at play in se­cur­ing not only the Brak­fontein con­tract with Eskom but also the Op­ti­mum deal. There was an out­cry last month when it was re­vealed that Min­ing Min­is­ter Mosebenzi Zwane trav­elled to Switzer­land with Tegeta in De­cem­ber and met with Glen­core shortly be­fore Tegeta’s takeover of Op­ti­mum was an­nounced.

On Fri­day, Howa dis­missed ques­tions about whether Tegeta planned to use political mus­cle to se­cure a sweet­heart deal from Eskom, say­ing: “Re­gard­ing al­leged political con­nec­tions, we deal only in facts and not spec­u­la­tion or in­nu­endo.”

Duduzane

Zuma

Nazeem Howa

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