Glencore pays R900m for Umcebo Mining


[] — GLENCORE International, the world’s largest commodities trader, on Wednesday announced it had completed the acquisition of an effective 43.66% equity interest in Umcebo Mining, a South African coal mining business.

Glencore agreed to buy the interest for about R900m in July 2010, subject to conditions precedent, including the approval of the regulatory authorities in South Africa and consent from certain third parties.

The company is aggressively targeting coal opportunities in South Africa, having made an offer for another South African coal company Optimum Coal earlier this year.

Umcebo has three thermal coal mines – Middelkraal, Kleinfontein and Klippan – in operation and a stand-alone wash plant, with an aggregate annual production capacity of 7.2 million run-of-mine tonnes.

In addition, the Wonderfontein mine is scheduled to begin production in 2013, with a long-term annual production capacity of 3.6 million run-of-mine tonnes.

“The transaction secures access to long-life resources from South Africa’s principal coal field in Mpumalanga, which has established infrastructure for the transport of export quality thermal coal,” said Glencore in a statement.

In addition the transaction also secures access to an eventual 1.5 million tonnes of export allocation in Phase V of the Richards Bay Coal Terminal.

Glencore also believes that Umcebo has an attractive pipeline of further development projects with attributable resources of at least 860 million tonnes.

In its first major takeover since its massive initial public offering in May this year, Glencore in late August expressed interest in acquiring Optimum Coal in a deal that valued the local coal producer at R8.5bn.

It later indicated that it would be willing to pay up to R9.98bn for the company after Optimum said there had been additional interest in its company.

Glencore’s proposal for Optimum was made through Shanduka Coal, which operates in the same region as Optimum’s two coal mines.

Shanduka Coal is 70% owned by Glencore.