Board reviews Oakbay’s bid to sell coal via terminal

THE board of the Richards Bay Coal Terminal (RBCT) was “following due process” in the application by Oakbay Investments to sell Optimum’s export entitlement of 8-million tonnes a year through the port to Vitol, RBCT corporate affairs manager Nontuthuko Mgabhi said on Tuesday.

When Oakbay Investments, the diversified business owned by the politically connected Gupta family, bought Optimum coal mine out of business rescue earlier in 2016, it also acquired the mine’s export entitlement. Unconfirmed reports suggest this is being sold to Vitol.

At a media briefing on September 8, Oakbay Investments CEO Nazeem Howa said: “There is no sale of the RBCT entitlement at this stage but that might change in the future.”

A Vitol spokesman declined to comment on Tuesday.

RBCT requires its shareholders to be coal producers.

Vitol, an international energy commodities trader with refineries and terminals, has no coal mines in SA, although it has agreements with Coal of Africa and Ikwezi Coal.

RBCT is a privately owned facility, built and funded by shareholders that include SA’s biggest coal producers.

Shareholders have a proportional entitlement to use RBCT’s capacity, which was recently increased to 91-million tonnes.

Any sale of an RBCT share must be referred to the board for approval. If the deal were to proceed without RBCT approval, the shareholder would be in default, which triggers the preemptive right for other shareholders to buy that stake.

RBCT export entitlement is valuable because Transnet Freight Rail (TFR) runs a dedicated rail line from Mpumalanga to the port, making it the most cost-effective way to export coal from the mines near Witbank.

TFR’s capacity on the rail line is less than 80-million tonnes, which is a constraint on the port, but as global seaborne thermal coal prices have been weak in the past few years, pressure on TFR to increase its capacity on the line has eased.

Vitol has no coal mines in SA