AEMFC in bid to acquire Optimum Coal

23 January 2019 Week 03 Issue 189

A consortium led by South Africa's state-run African Exploration Mining and Finance Corporation (AEMFC) has joined the race to acquire coal mining assets from the ailing Optimum Coal.

“We believe there exists, through this consortium and within our bid for Optimum Coal and its associated assets, a significant potential to demonstrate the value inherent in a workable and sustainable South African public-private partnership,” said AEMFC CEO Sizwe Madondo last week.

Optimum Coal, a subsidiary of Tegeta Exploration and Resources, owns and operates Optimum Collieries, an opencast and underground complex comprising the Kwagga, Pullenshope, Eikeboom, Boschmanspoort, and Koornfontein mines in Mpumalanga province.

It also operates the key Richards Bay Coal Terminal.

The mines together produce 10 million tonnes per year, of which half is supplied to Eskom. The rest is exported to Asia and Europe through the Richards Bay terminal, which has a storage capacity of 8.2 million tonnes per year.

AEMFC said it had funding and operational expertise to create a commercially viable business.

“We view this transaction as of national significance … We can build South Africa’s image, while instilling confidence within the local and global investor community that South Africa is open for business on commercially sound terms that benefit all South Africans,” said Madondo.

Commodities traders Vitol Group, Project Halo and Phakamisa Consortium have earlier submitted bids to acquire Optimum’s coal assets.

Project Halo has committed 600 million rand (US$43 million) towards implementation of the business rescue plan and offered to purchase the Optimum assets for 3.6 billion rand (US$259 million).

The mines have been put up for sale by creditors as part of corporate restructuring plan after a scandal involving alleged fraudulent procurement of government contracts, among other offences, by the Gupta Group of Industries.

An investigation is on over the claims that the members of the Gupta family used their friendship with former President Jacob Zuma and his son Duduzane to secure a contract to supply coal from mines to the state-run Eskom.

Gupta Group, however, denies any wrongdoing in securing the coal supply contract.

Edited by

Richard Lockhart

Editor

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