Guptas' Oakbay Resources signs new coal export deal

(iStock)
(iStock)

Johannesburg – Oakbay Investments chief executive Nazeem Howa confirmed that the group secured a new coal export deal.

He was speaking to press on a teleconference on Thursday, following a financial results announcement for the group, for the year ended 29 February 2016. Howa was commenting on the export opportunities available to the group through its mining business.

“The export contract is R150 per tonne more than the highest contract we have with Eskom,” he said. The contract presents an opportunity for the group to “grow significantly”, he added.

Oakbay Investments has a 29% shareholding in Tegeta. National Treasury has been investigating a coal contract with the mining company.

In 2016 Tegeta completed its R2.15bn acquisition of the Optimum Coal Mine from Glencore. The acquisition was formally approved by the Competition Tribunal of South Africa in February. The Tribunal found that the transaction would unlikely or “substantially” prevent or lessen competition in the thermal coal market, the group stated.

At this time, Tegeta took full operational control of the Optimum and Koornfontein coal mines. Since then, Tegeta has been able to grow production and enhance efficiencies to bring down the cost of coal production at both sites.

Tegeta owns and operates Optimum and Koornfontein coal mines. Oakbay Resources owns Shiva Uranium and the Brakfontein mine.

Tegeta supplied 1.49m tonnes of coal to Eskom. That is 1.25% of Eskom's coal supply. Oakbay's share in Tegeta supplies 0.36% of Eskom's coal supply, or 0.43m tonnes.

Howa emphasised that the group’s revenue was mainly generated by private contracts, and government contracts only contributed 8.9% to overall revenue of R2.62bn.

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