Vitol, Trafigura to bid for coal mines once owned by Guptas

The Optimum Coal mine. (Image from archives)

(Bloomberg) — Commodities traders Vitol Group and Trafigura Group Ltd. have entered the bidding process for South Africa’s Optimum Coal, a miner under bankruptcy protection that was once controlled by the Gupta family.

The interest from two of the biggest commodities trading houses underscores the strategic value of Optimum’s annual entitlement to ship 8 million tons of coal through Africa’s largest export terminal for the fuel. While South Africa is well-positioned for exports to India and China, shipments are constrained by limited port capacity. Other investors in the Richards Bay Coal Terminal include mining giants Anglo American Plc, South32 Ltd., and Glencore Plc.

Bids for Optimum are expected to be finalized by the end of November, with due diligence starting on Monday, said Bouwer van Niekerk, a lawyer for the company’s business rescue practitioners. The assets are expected to draw other potential bidders in addition to the interest shown by Vitol and Trafigura, he said.

Local companies Seriti Resources Holdings Pty Ltd. and Exxaro Resources Ltd. expressed interest earlier. Glencore was also considering a bid, two people familiar with the matter said in March.

Optimum was put into business rescue.

Optimum was put into business rescue, a form of bankruptcy, after members of the Gupta family fled South Africa. The Gupta’s holding company last year agreed to sell Optimum for 2.97 billion rand ($201 million) to Swiss company Charles King SA. The sale wasn’t completed.

Second attempt

Bernard Swanepoel, the former head of Harmony Gold Mining Co., said he is part of the Phakamisa Consortium, which is bidding with Trafigura for the assets. A spokeswoman for Trafigura, the second-biggest metals trader and third-largest oil trader behind Vitol and Glencore, declined to comment.

This will be Vitol’s second attempt at acquiring the coal-export allocation. The trader teamed up with Burgh Group Holdings in 2016 to buy it from the company part-owned by the Guptas. The world’s largest independent oil trader walked away from the deal the following year.

A spokeswoman for Vitol declined to comment.

Burgh Group won a temporary contract from business rescuers in April to manage Optimum.

(By Paul Burkhardt and Andy Hoffman)

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