Commodity trader Vitol Group has shelved plans to buy a stake in South Africa’s biggest coal terminal from the country’s controversial Gupta family
Vitol and Burgh Group, a local coal producer, had announced plans to buy the Gupta family’s 7.6 per cent stake in the Richards Bay Coal Terminal in September 2016.
The deal would have given Vitol and Burgh the right to ship 8m tonnes of the fuel from South Africa each year. Thermal coal is burnt in power stations to generate electricity.
But it was dogged by problems. The terminal was part of a wider coal business called Optimum previously owned by Glencore, the Swiss miner and commodity trader.
Glencore placed Optimum in business rescue proceedings in 2015 after a long-running row with South Africa’s power utility Eskon. The business was then sold to the Gupta’s, allies of president Jacob Zuma.
“The consortium comprising Burgh Group Holdings and Vitol will not be proceeding with the acquisition of Optimum Coal Terminal Pty from the Tegeta Group,” Vitol said in a statement. The company declined to make any further comment.
Vitol is the world’s biggest oil trading group, handling more than 7m barrels per day. But it also has a coal business that handles around 30m tonnes of the fuel a year mainly through long-term supply mining companies in the US, Canada, Indonesia, Australia, South Africa and Russia.
Opened in 1976 with an original capacity of 12m tonnes per annum, Richards Bay is capable of handling more than 90m tonnes of coal a year, according to its website. Only shareholders, which include Anglo American, South32, Glencore and Exxaro have an automatic right to ship from the terminal.
These investors would also have had to rubber stamp the sale of the Gupta’s shareholding to Vitol, something many observes said was unlikely to happen. Alongside Australia and Indonesia, South Africa is one of the world’s biggest suppliers of thermal coal to seaborne market.
Last week, South Africa suspended a contentious new charter for the country’s beleaguered mining industry, less than a month after it was introduced.