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* Glencore's biggest target since its listing
* Asian giants hungry for S.African coal
(Adds Glencore won't touch Optimum marketing deals, adds 60-day
offer to shareholders)
By Ed Stoddard and Julie Crust
JOHANNESBURG/LONDON, Sept 1 Commodity trading
giant Glencore confirmed on Thursday that it aims to
take a controlling stake in South African coal miner Optimum
Coal Holdings with its local partner, prominent local
politician-turned tycoon Cyril Ramaphosa.
The deal would be worth around $1 billion at OCH's current
This would be Glencore's most significant purchase since its
record share listing, when it sacrificed its fiercely protected
privacy to gain the balance sheet firepower for making
Optimum, a mid-size producer with large export capacity at
Richards Bay Coal Terminal and reserves, attracted keen buying
interest from local and international companies since BHP
Billiton originally put the mine up for sale.
South African coal is a key source of supply to both the
European and Asian markets, particularly India - South Africa
ships around 30 percent of its coal to India and increasingly,
But competitors of Glencore - including some of the world's
biggest commodity and energy traders - who had also looked at
buying OCH, said earlier this week that they were uninterested
because the mines were saddled with long-term marketing
"Where's the value if the marketing agreements are still in
place?" one senior executive at an international trader said.
"We looked at it, we were approached earlier this year and
we said 'no'," he added.
Unless these agreements could be bought out or broken, there
was no value they could see in OCH's assets, sources at several
But Glencore will not touch the marketing contracts which
BHP Billiton and Mercuria Energy have for coal from both
the Optimum and Koornfontein mines .
"The lifespan of the assets is materially in excess of the
lives of the existing contracts and the acquisition price
represents a great value acquisition for the long term," a
source close to the proposed deal said.
The acquisition of South Africa's sixth-largest coal
producer would give Glencore access to two operating assets, the
Optimum Collieries and Koornfontein Mines, as well as 8 million
tons of coal export entitlements from the Richards Bay Coal
"Optimum's high quality, long life coal assets and
significant presence at Richards Bay Coal Terminal would be an
attractive addition to our existing South African coal
business," said Tor Peterson, director of the Coal/Coke
commodity department at Glencore.
"We expect strong Chinese and Indian imports and concerns
surrounding nuclear generation capacity to result in sustained
underlying demand for coal," he added.
Glencore, via its wholly owned subsidiary Piruto B.V., said
on Thursday that it and Lexshell 849 Investments Ltd, a company
owned by Ramaphosa, have entered into agreements to buy 43.51
percent of Optimum's shares.
Glencore had on Monday either bought or gained a commitment
to sell 49 percent of OCH's shares, sources close to the
companies involved said.
Glencore had made offers to all OCH shareholders in early
July. Shareholders had signed a 60-day agreement to consider
Glencore's offer exclusively and this is to expire shortly,
within the next week or so, they said.
The consortium plan to buy the remaining shares for 34 rand
each, a 26 percent premium on the coal producer's share price
before it released a cautionary statement on Aug. 17.
Shares in Optimum were up 1.4 percent at 33.55 rand, while
Glencore's shares closed down 1 percent in London at 416.75
Glencore said the proposed transaction will preserve
Optimum's status in South Africa as a black-owned, black
(Additional reporting by Jacqueline Cowhig; Editing by Greg