SOUTH AFRICA – Africa Coal Partners, a special purpose vehicle (SPV) set up and managed by global investment holding company Duet Group, will acquire a 45.18% stake in Mbuyelo Coal Proprietary Limited from Ichor Coal.
The agreed purchase price was set at US$104mn with the transaction expected to close in Q1 2020, once regulatory requirements have been completed.
Mbuyelo Coal is a South African coal producer supplying the national power utility Eskom. It operates three open-pit mines with a minimum monthly production of 600,000 tonnes per month, thus averaging 7.2 to 8.0mn tonnes per annum.
Mbuyelo has for the past few years been investing in capacity building and technology upgrade to better serve the local demand.
Henry Gabay, CEO and co-founder of Duet-Group, said, “We are very excited by the opportunities offered by the coal industry in South Africa. South Africa is not yet in a position to switch completely into green energy, hence coal will remain a key component of South Africa’s energy portfolio for the foreseeable future. Reliable power production remains at the heart of Africa’s industrialisation and its ability to lift its citizens out of poverty.
“We believe that new technologies can be deployed to make the coal industry more environmentally sustainable while offering a credible solution to the challenges of generating power in South Africa. We also believe it’s an opportunistic time to invest in South Africa.”
Ichor CEO Nonkululeko Nyembezi-Heita said the company has been reviewing strategic options for some time and that the opportunity offered by Duet meets its goals in a challenging environment with a partner that is willing to significantly contribute to Mbuyelo’s growth and profitability.
Rirhandzu Siweya, CEO of Mbuyelo, declared, “I welcome the arrival of an African focused investor that will help us grow and seize new opportunities in a very interesting environment for local coal players.”
IchorCoal acquired its first ownership in Mbuyelo Coal in 2012 and gradually increased its stake to 45% by 2013.
Mbuyelo Coal is one of the few successful black-owned companies created out of the South African MPRDA (Mineral and Petroleum Resource Development Act). The extensive project pipeline of Mbuyelo Coal (Pty) Ltd will ensure a balanced upside over the next couple of years when developing assets further and pushing them up the value curve.