Wescoal eyeing mergers, acquisitions

(File, iStock)
(File, iStock)

Johannesburg - JSE-listed coal mining and trading company Wescoal [JSE:WSL] is eyeing acquisitions and mergers with similar-size companies as it feels it is time for consolidation in the junior mining space.

Addressing journalists in Johannesburg on Monday afternoon, Wescoal chairperson Robinson Ramaite said there were coal companies considering putting some of their assets on the market.

“We see ourselves as the taker of those assets,” he said.

Formal and informal discussions had confirmed that some companies were looking to offload assets.

The company is also considering mergers with fellow junior coal companies.

“The current market environment is primed for a consolidation in the junior mining space and Wescoal is well positioned to take advantage of this opportunity.

A strong balance sheet would further enhance Wescoal’s position relative to industry peers,” the company said in a statement. In the 2015 financial year, Wescoal increased revenue by 46% from R1.15bn to R1.67bn.

Ramaite did not name the targeted companies. He said he was restrained on what to disclose.

He said there has been much talk about consolidation in the junior mining space because and Wescoal was ready to make the move.

He said it made sense for junior coal miners to consolidate. Benefits of this include better access to funds, Ramaite said.

Some of the junior miners had existing contracts with Eskom, he said. Wescoal supplies coal to Eskom on short-term contracts, while it is negotiating long-term deals with the power utility.

Ramaite said the company was “heavily” involved in talks about the possible deals with fellow miners. He said the company could make an announcement “in the next few weeks”.

Junior coal miners in South Africa include Coal of Africa Limited, Keaton Energy, Continental Coal and Universal Coal.  

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