Optimum Coal can now export
NEW MINE OWNERS: RBCT AGREES TO TERMS
First shipments are expected in April, following a deal between the two parties.
Richards Bay Coal Terminal (RBCT) and Liberty Coal, new owner of the Optimum Coal Mine (OCM), have reached an agreement that will allow Optimum to export coal through the port once rail arrangements with Transnet have been finalised.
In a joint statement issued on Monday, RBCT and Liberty Coal say they expect the first coal to be railed to the port in April.
The agreement brings to an end a dispute between the two parties that prevented Liberty Coal from exercising its export entitlement at Richards Bay.
RBCT is owned by the country’s largest coal producers, such as Seriti, Thungela, Glencore and now Liberty Coal. It has the capacity to handle 91 million tons (Mt) of coal a year, but last year it managed to process less than 50Mt due largely to Transnet’s crumbling freight rail performance.
OCM and the Optimum Coal Terminal (OCT) at Richards Bay were acquired last year by British businessman and former Gupta associate Daniel McGowan. Both companies, formerly part of the Gupta empire, are in the process of exiting six years of business rescue.
The companies were placed in business rescue in 2018, after local banks cut off banking facilities to the Guptas due to their widely publicised involvement in state capture.
OCM relaunch held up
Earlier in March, Liberty Coal said the relaunch of OCM was being held up by fellow RBCT shareholders and competitors, which had imposed “unreasonable conditions which can only be described as unfair, anti-competitive and/or oppressive”.
RBCT hit back, saying Liberty Coal had failed to meet material suspensive conditions that would allow it to exercise its export entitlement.
These conditions included the transfer of mining rights and share ownership to Liberty Coal, obtaining ministerial permission for the transfer of these rights, and setting up a community trust. The disagreements now appear to be settled.
Business rescue update
“Liberty Coal and the business rescue practitioners of OCM and OCT will, in the meantime, continue with implementation of the OCM and OCT business rescue plans and the supporting transaction agreements, with the view to ensuring that all necessary registrations relating to the transfer of OCM’s mining assets, including all immovable properties, are as far as possible completed on or before 31 January 2025,” says the joint statement.
Liberty Coal took operational control of OCM on 1 February this year, together with beneficial occupation and possession of OCM’s assets. It also assumed the compromised claims of OCM’s and OCT’s respective creditors.
“Subject to relevant fiscal, statutory, and related considerations, OCM and OCT will be formally discharged from their business rescue proceedings once their respective business rescue practitioners are satisfied that substantial implementation has occurred,” according to the parties.
“RBCT looks forward to the revitalisation of the Optimum Coal Mine and its restoration by Liberty Coal and its shareholders as a significant and sustainable contributor to employment opportunities and economic activity within the greater Steve Tshwete municipal region and to the South African fiscus.”
Coal stockpile
Earlier this month, Liberty Coal said it had more than one million tons of coal stockpiled due to its inability to export through RCBT. Business rescue practitioners at OCM resorted to allowing contractors to mine “mini pits” to generate cash flow and keep the mine afloat.
The relaunch of mining operations under Liberty Coal coincides with signs of recovery at Transnet Freight Rail, which should allow for the shipment of larger volumes of coal to the Richards Bay terminal.