Glencore adds African oil to Peruvian zinc in bumper deal week
JOHANNESBURG: Glencore Plc agreed to buy a controlling stake in Chevron Corp assets in Southern Africa for US$973mil, expanding its move into the downstream fuel business and marking the Swiss commodity giant’s second big deal this week.
Glencore said it will buy 75% of Chevron’s South African and Botswanan business from minority black investors who exercised a pre-emptive right. The assets include a 100,000 barrel-a-day refinery in Cape Town and more than 800 gas stations in the two countries.
Chevron agreed in March to sell its stake to China Petroleum & Chemical Corp for US$900mil, but the deal stalled after the local investors exercised their right.
Glencore, which will fund the Chevron purchase, will support Off The Shelf Investments Fifty Six Pty Ltd as a technical and financial partner, it said in a statement yesterday.
The acquisition, together with a recent deal in Mexico to invest in fuel service stations and terminals, appears to signal a shift in Glencore. Until now, the company had invested in so-called upstream assets, such as oil fields, to complement its trading operation. After significant writedowns in oil fields in countries including Chad, Glencore is now investing in so-called downstream businesses such as refining and fuel service stations.
It comes as commodities traders including Vitol Group BV and Trafigura Group have pushed into the business globally, to help offset declining margins in their bread-and-butter trading businesses. The firms now have hundreds of stations from Latin America to Africa serving as outlets for the products they trade.
The Chevron deal comes less than three days after Glencore announced it agreed to increase its holding in Peru’s Volcan Cia Minera SAA, the largest zinc producer in Latin America and could spend as much as US$956mil.
While profits improved during the first half, Glencore kept its dividend unchanged and said in August that it would use its balance sheet to pursue selective growth opportunities.