Vitol Said to Mull Gupta Stake in South Africa Coal Terminal

  • Vitol interested in Richards Bay Coal Terminal export slot
  • Optimum controls eight million ton coal allocation at port

Swiss commodities trader Vitol Group is interested in buying a stake in South Africa’s Richards Bay Coal Terminal from a company controlled by the Gupta family, according to a person with knowledge of the matter.

Buying the stake in Africa’s biggest coal export facility from Optimum Coal Holdings Ltd. would give Geneva-based Vitol rights to ship eight million metric tons of the fuel annually.

While South Africa has high-quality coal reserves and is well positioned to export the fuel to India and China, shipments are constrained by limited port capacity. Only shareholders have an automatic right to export through Richards Bay, which accounts for almost all of South Africa’s coal shipping capacity.

The Guptas and South African President Jacob Zuma’s son Duduzane bought Optimum through Tegeta Exploration & Resources Ltd. for 2.15 billion rand ($148 million) from Glencore Plc in December. Optimum also owns two coal mines.

Cabinet Allegations

While Vitol is interested in the purchase, it’s concerned about the negative publicity around the Gupta family, who have been accused by some ruling party officials of trying to influence South African cabinet appointments, the person said. They asked not to be identified, because the information is private. Vitol spokeswoman Andrea Schlaepfer declined to comment.

Vitol has trading and marketing operations in South Africa, where it’s building a fuel-storage facility with Malaysia’s MISC Group in Cape Town. In 2012, it formed a coal trading company in neighboring Mozambique by buying a stake in a terminal that exports coal from South African mines. Vitol traded more than 20 million tons of physical coal in 2015, according to its website.

The Gupta family spent more than two decades building up a South African business empire spanning mining, computers, engineering, media and a safari lodge. As well as befriending Zuma, they included Duduzane as a shareholder in several of their companies, including the firm that acquired Optimum.

Asset Sales

They announced that they would sell their South African interests on Aug. 27. “At this time it would be inappropriate to comment as far as the detail of any such transaction,” Gert van der Merwe, a lawyer for the Gupta-controlled Oakbay group of companies, said by phone Friday.

Nazeem Howa, the chief executive officer of their holding company, Oakbay Investments, said in a Bloomberg Television interview on Aug. 30 that there has been “tangible” interest from an international investor in the assets.

The Gupta family has become embroiled in a power struggle between Zuma and Finance Minister Pravin Gordhan over control of spending by state-owned companies. Gordhan’s team is probing contracts between a company controlled by the Gupta family and state-owned power utility Eskom Holdings SOC Ltd.

Other shareholders in the Richards Bay terminal include Glencore, South32 Ltd., and Anglo American Plc.

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