Glencore shareholder invests in South African refinery upgrade

A Glencore shareholder is set to invest R6bn ($326mn) to upgrade Astron Energy’s 100,000 barrels per day (bpd) Cape Town petroleum refinery, committing to reinforcing the country’s energy sector amid difficult times.

The investment, made by Ivan Glasenberg, has become one of the largest commitments in South Africa for numerous years, according to Billionaires Africa, and signals the importance of the refinery, which has now become a focal point in plans to turn Astron Energy into a stronger regional player as part of efforts to increase exports.

Moreover, as the plant remains South Africa’s third-largest refinery, Astron also plays a vital role in local fuel supply, particularly as the country has continued to place a heavier emphasis on fuel imports to support its economy. According to industry analysts, the refinery acts as an economic anchor, allowing for the creation of R95bn in revenue while also supporting around 50,000 jobs.

Glencore’s CEO, Gary Nagle, has repeatedly stressed that the refinery is cash generative, with the latest cash injection seemingly supporting the position. A boost from Glasenberg will allow Astron to upgrade the facility, improving output and efficiency, as well as extending its life.

The project is also shown in Nedbank’s Capital Expenditure Project Listing 2025, which has highlighted a rebound in private sector spending amid weakened public finances.

Astron’s refinery (also known as the Milnerton plant) only recently re-started its operations in 2023, with the company noting at the time that it planned to fully recommence the production of refined products for supply into the Western Cape and the wider South African regions.

Commitments to reopen, and indeed invest in the facility, are at odds with ongoing trends in South Africa, where, due to clean energy regulations, some oil and gas refineries have been choosing to shut down rather than invest in refurbishment and upgrades.

In the recent past, the refinery had been closed until 2020, following a deadly fire that damaged the facility, killing two engineers in the process. Glencore first acquired it in 2019 as part of a $1bn deal with Chevron and had recently completed a $400mln upgrade to the facility to allow it to produce low-sulfur fuel. Spokesperson for Astron Energy, Suzanne Pullinger, said in 2022 regarding the restart that “the refinery forms a significant part of the Astron Energy business, and it remains our intention to safely restart by the end of Q4 2023 . . .with a key focus on maximising safety for the restart and beyond.”

Notably, South Africa’s Minister of Mineral and Petroleum Resources Gwede Mantashe has previously highlighted concerns about investment, saying in 2022 that: “While we appreciate the return to full operation of the Cape Town refinery, we are also mindful of the need for investments in a new refining capacity, particularly in light of the recent oil and gas discoveries both in the South African and Namibian waters.”

With this in mind, a cash injection from Glencore will likely be positive news, particularly as South Africa continued to see a record increase in imported fuels following the shutdown – either temporary or permanent – of several domestic refineries.