REFILE-UPDATE 2-Glencore, others circle Optimum Coal

Fri Aug 26, 2011 5:08am EDT

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* Analysts say smaller producers need to consolidate

* Shares up over 6 percent

* S.African miners have been targets this year

By Ed Stoddard

JOHANNESBURG, Aug 26 (Reuters) - Optimum Coal stood at the centre of bid interest in South African assets on Friday, confirming receipt of more than one takeover approach a day after news that commodities trader and miner Glencore was interested.

Shares in Optimum leapt 6 percent in morning trade. Glencore plans to strike a deal using South African businessman Cyril Ramaphosa as a partner, sources close to the deal said on Thursday.

The move would take advantage of a recent drop in sector share prices. It could also become the biggest acquisition since listing in May for Glencore, already a major player in both South Africa and the global coal trade.

Optimum's share price at 0800 GMT was almost 6 percent higher at 31.75 rand, its highest level in about four months according to Thomson Reuters data.

Optimum had issued a cautionary statement earlier this month, alerting investors to circumstances which could affect its share price, but had denied having been approached by any prospective buyer.

"The stock was below 23 rand in early August so you would see why there is lots of interest at those levels. That would have been a good time to pounce. The first cautionary announcement came out on Aug. 17, and the guys may have looked then and said this looks juicy," said Sasha Naryshkine, an analyst with Vestact in Johannesburg.

"It will depend now on what kind of a premium they are willing to pay."

Optimum, South Africa's sixth-largest coal producer, said in a statement it had received "unsolicited, non-binding expressions of interest from third parties to acquire a controlling interest in Optimum".

At current prices, Optimum has a market capitalisation of around $1 billion.

GLENCORE CIRCLES

The sources told Reuters on Thursday that Glencore and Ramaphosa, a former politician and trade unionist turned businessman, were talking to Optimum shareholders and were preparing to make an announcement.

Shareholders in Optimum confirmed they had received an offer from the commodities giant and Ramaphosa, whose unlisted Shanduka Resources owns 30 percent of Shanduka Coal, a venture with Glencore.

Shanduka Coal, 70 percent owned by Glencore, has until recently been Glencore's vehicle for investment in coal mining in South Africa.

OCH, formerly owned by miner BHP Billiton , will produce 13.7 million tonnes of coal in 2011, up from 13.6 million in 2010.

Glencore's deep pockets and Ramaphosa's influence would make for a formidable bid which could nullify any opposition arising from unions or shareholders.

Glencore, long an opportunistic buyer, said this week it sees bargain-hunting opportunities in the wake of current market turbulence and will pursue deals aggressively, as share prices have dropped and private companies are less optimistic about their outlook.

Glencore has also said it expects firm demand from emerging economies like China and India, top coal consumers.

The world's largest commodities trader, led by South African former coal trader Ivan Glasenberg, is already the world's largest participant in the supply of seaborne steam coal and is a heavyweight player in South African coal.

South African miners have been in the sights of big foreign companies this year keen on the continent's rich mineral resources. China's Jinchuan Group won a bidding war against Brazil's Vale in July for South African-listed cobalt and copper producer Metorex .

Growing Chinese and Indian demand has put coal centres stage in the energy sector. South Africa is a useful swing producer of thermal coal which can ship both to Europe and to the U.S. Pacific coast.

Bu analysts have said smaller coal miners face intense pressure to consolidate as they battle ageing mines, unclear regulation and woefully inadequate rail and port export capacity, making them ripe for cash-flush partners. (Additional reporting by Helen Nyambura in Johannesburg and Clara Ferreira-Marques and Jacqueline Cowhig in London; Editing by)

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