Robinson Ramaite

“A FEW challenging months of financial distress and boardroom deadlocks” is how Salungano summed up the unravelling in 2022 of its relationship with its co-shareholders in the Arnot OpCo (Arnot). In 2010, Salungano combined with former Arnot mine employees to reopen the operation, which had been suspended after its then owner, Exxaro Resources, failed to renew a long-term supply agreement with Eskom. Arnot resumed coal supplies to Eskom in 2022, but there were soon reports of questionable financial management.

A few months later, Salungano applied successfully to put Arnot into business rescue. The business had been in financial distress for some time, according to Salungano’s Robinson Ramaite. Arnot’s other shareholders hit back by taking Salungano to arbitration, accusing it of failing to honour its funding obligations. The entire embroglio is a management-sapping distraction for Ramaite, especially as a previously announced strategy by Salungano to rebrand and reposition itself needs his full attention. Formerly known as Wescoal, a supplier of coal to Eskom, Salungano is now aiming to become a broader energy, minerals, agriculture and logistics investment company.

The group’s interim accounts demonstrate the urgent need for revenue diversification. Although global thermal coal prices have soared, Eskom pays considerably less. Salungano’s Vanggatfontein mine was also compelled to suspend operations while it discussed a new contract with Eskom. It only came back on stream in September. Salungano is now exporting more coal, so profits should improve this year. The hope is that with improved top-line numbers and more management focus, Ramaite can bring about Salungano’s repositioning.