Vitol Said to Agree to Buy South Africa Coal-Export Rights

Updated on
  • Trader said to reach deal with Tegeta, part-owned by Guptas
  • Tegeta’s Optimum has right to ship from Richards Bay terminal

Vitol SA has reached an agreement with a company part-owned by the Gupta family, who are friends of South Africa’s President Jacob Zuma, for the right to export coal from the Richards Bay Coal Terminal, according to a person familiar with the transaction.

The deal between the Swiss commodities trader and Tegeta Exploration and Resources Ltd. has closed, said the person, who asked not to be named because the information is not public.

The Guptas and Zuma’s son, Duduzane, bought Optimum Coal Holdings Ltd. through Tegeta from Glencore Plc in December. Optimum and Tegeta’s Koornfontein mine, as shareholders of the terminal, have the combined right to ship about 8 million metric tons of coal annually. Buying the rights would strengthen Vitol’s position in the coal trade in a country that’s a key supplier to Asia.

“We are unaware that a deal has been concluded” between Vitol and Tegeta, Richards Bay Coal Terminal spokeswoman Nontuthuko Mgabhi said by phone. Vitol spokeswoman Andrea Schlaepfer wasn’t immediately able to comment when reached by phone.

Richards Bay Coal Terminal, the biggest such facility in Africa, shipped a record 75.4 million tons of the fuel last year. It can ship 91 million tons annually and accounts for almost all of South Africa’s export capacity.

While South Africa has a large coal resource, its capacity for exports is constrained by limited port infrastructure. Only shareholders, who include Anglo American Plc, Glencore and South32 Ltd., have an automatic right to ship through Richards Bay Coal Terminal.

In addition to trading and marketing operations in South Africa, Vitol’s storage unit VTTI is building a fuel-storage facility 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.