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Glencore International plc (LON:GLEN), seeking access to the growing coal market in India and China, announced on Thursday an estimated $1 billion plan to acquire Optimum Coal Holdings (JNB:OPT), a significant thermal coal producer in South Africa.
Glencore will value the ordinary shares of Optimum at 34 ZAR (4.8 USD), a 35% premium over the 30-day volume weighted average.
“Optimum’s high quality, long life coal assets and significant presence at Richards Bay Coal Terminal would be an attractive addition to our existing South African coal business,” said Tor Peterson, director of the Coal/Coke commodity department.
“We expect strong Chinese and Indian imports and concerns surrounding nuclear generation capacity to result in sustained underlying demand for coal. This transaction would further demonstrate Glencore’s ability to identify attractive opportunities, capitalise on its strong local relationships and execute complex transactions.”
Acquiring Optinum will give Glencore access to Optimum’s collieries and Koornfontein Mines – both in the Mpumalanga coalfield. It will also give Glencore eight million tons of coal export entitlements from Richards Bay Coal Terminal through Optimum Coal Terminal’s shareholding in RBCT.
Glencore also says that the transaction complements Glencore’s existing coal operations in South Africa with Shanduka Coal and gives Glencore access to Optimum’s attractive growth projects such as the recently acquired TNC and Remhoogte projects.
