Glencore International Plc agreed to sell a stake in Shanduka Coal for about 700 million rand ($84 million), ceding a majority holding to its venture partner led by former politician and union leader Cyril Ramaphosa.
The sale by the biggest publicly traded commodities company raises Shanduka Group’s stake to 50.01 percent from 30 percent, according to Phuti Malabie, chief executive officer of the Johannesburg-based venture partner. Shanduka Group will use 370 million rand of its own money and its 30 percent of Kangra Coal to fund the deal, she said by phone yesterday.
“We always had the intention to increase our equity in coal,” Malabie said. There are “good growth prospects in terms of the internal market and exports,” such as China and India.
Shanduka Group has committed 200 million rand to fund coal projects over the next five years, she said, adding that the Glencore deal is subject to antitrust and other approvals.
The partners will share control of the coal unit, which produces about 7 million metric tons of coal a year, Shanduka Group said in an e-mailed statement. The venture has capacity to produce about 9 million tons, according to Glencore’s website.
Shanduka, with investments from minerals and McDonald’s Corp. franchises to energy and property, is increasing holdings in its main industries including coal. South African consumption of the fuel is set to rise as state-run utility Eskom Holdings SOC Ltd. builds new coal-fired plants to meet a power shortage.
The latest deal is unrelated to Glencore and Ramaphosa’s planned takeover of Optimum Coal Holdings Ltd., the country’s fourth-largest coal exporter, Malabie said. Glencore’s Piruto BV unit and Ramaphosa’s Lexshell 849 Investments have bought, or agreed to acquire, 65.14 percent of Optimum and plan to offer at least 38 rand a share for the stake they don’t already own.
Shanduka Group may begin trading its shares on a stock exchange in the next five to seven years, Malabie said.
Ramaphosa founded the National Union of Mineworkers and is a former secretary-general of the ruling African National Congress and leader of the ANC team that negotiated the end of apartheid. He left politics after Thabo Mbeki was chosen ahead of him as deputy national president under Nelson Mandela, the country’s first black leader.
“It was always Glencore’s intention to be supporting a company in South Africa that is majority” black economic empowerment controlled, Simon Buerk, a Baar, Switzerland-based Glencore spokesman, said by e-mail.
South Africa’s black economic empowerment laws are meant to redress discrimination under apartheid by requiring some businesses, including mines, to transfer stakes to black owners.
Glencore fell 2.3 percent to 383.55 pence at the close in London, where the FTSE 350 Mining Index dropped 4 percent.