IchorCoal targets 20mt mid-tier coal status

[miningmx.com] – NONKULULEKO Nyembezi-Heita, CEO of IchorCoal, is hoping to the firm will follow its R244m investment in Universal Coal with transactions that help consolidate the South African coal sector with attributable production of between 15 million tonnes a year (mtpa) to 20mtpa targeted.

“We are in a hurry to participate in the consolidation of South Africa’s coal industry,’ said the former CEO of ArcelorMittal SA (AMSA) who has made short work of her six months at IchorCoal, a firm listed in Frankfurt, Germany.

IchorCoal announced on September 2 that it would buy a direct 18.4% stake in Universal Coal, a 2.5mtpa coal producer listed in Sydney but operating in South Africa. As with IchorCoal, it has high hopes of expansion.

If IchorCoal elects to convert “preferred’ or preference shares in Universal Coal, which it bought as part of the same transaction, it will have a total stake of 29,99% stake and be allowed to elect two members to Universal Coal’s board, including Nyembezi-Heita herself.

“We want to look at assets where licensing is a not a big issue, where there’s infrastructure, and where there’s a company that needs an injection of capital in order for them to get over their hurdles,’ she said.

This therefore excludes assets in South Africa’s Waterberg coal fields in the Limpopo province where rail routes still require significant development.

IchorCoal already has significant growth options in South Africa.

In addition to its stake in Universal Coal, IchorCoal has a 74% stake in Vunene Mining which operates the Usutu colliery which, as a supplier to Eskom’s Camden power station, was the largest single producer of coal in South Africa during the Seventies and Eighties.

It also owns a 45% stake in Mbuyelo Coal, an entity that controls the Eloff property, adjacent to Total Coal South Africa’s Eloff, with some 400mt in resources.

Given the significant exposure to blue sky in Mbuyelo, Nyembezi-Heita has a bias towards finding investments in mines that already have production, or where there are development properties close to generating cash, but that need a bit of a push.

IchorCoal is backed by the Sapinda Group which was founded by colourful German entrepreneur, Lars Windhorst whose back story is worth a screenplay all of its own.

Windhorst was famed for having started an electronics business at 16. It produced $50m in turnover in its first year which led Helmut Kohl, the German chancellor at the time, to name Windhorst as an emblem of the country’s future.

The business eventually suffered the effects of Asian crisis. Windhorst was forced into bankruptcy and faced fraud and embezzlement charges.

He acknowledged a breach of trust allegation in Berlin, and paid penalities, in order to end criminal proceedings against him. He also survived an aircrash. Now 37 years old, he lives in London.