London - Commodities trader and miner
Glencore is pursuing 50:50 joint ventures with South
African partner Cyril Ramaphosa across the mining sector with an
emphasis on bolt-on deals, industry sources and analysts briefed
by the commodities group said.
Ramaphosa's Shanduka Group last week said it wanted to
increase its stake in a coal venture currently 70 percent owned
by Glencore, without saying what the stake would be.
South African news reports had suggested could increase its
interest to a controlling stake as it reviews its strategy, but
the sources and analysts told Reuters the two partners would
continue to pursue deals in coal and beyond on an equal footing.
Glencore and Ramaphosa are powerful partners in the region
and the two are pursuing a broad strategy in South Africa -- a
country which has attracted less foreign investment than others
in Africa -- with a shipping list that includes Anglo American
unit Kumba Iron Ore [JSE:KIO], coal miner Exxaro Resources [JSE:EXX], BHP Billiton [JSE:BIL] reserves and high-quality
reserves in junior miners' hands, they said.
Kumba and Exxaro would not be easy or short term, however.
"Glencore is not backing out in any way by reducing its
stake in Shanduka Coal (joint venture), quite the opposite -
Glencore wants to move quickly and is going on an acquisition
spree. But whatever they do with Ramaphosa will be done on a
50:50 basis and for all assets, not just coal and on a
country-wide basis," one London-based industry analyst said.
"Shifting the stakes in Shanduka Coal is just putting
everything on the same basis but they want to grow the
partnership into something on a much bigger scale," he said.
Glencore and a Ramaphosa venture said last month they aimed
to take a controlling stake of miner Optimum Coal Holdings
. They would become South Africa's fourth-largest coal
exporter if the bid succeeds. .
In an indication of appetite for precious metals, Shanduka
has agreed with Lonmin , the world's third-largest
platinum producer, on a deal that could see it investing $137
million for control of its Limpopo division .
"They can do more with smaller assets than a larger group
could, they see more broadly, the bigger picture, so Glencore
are looking to do bolt-ons, they have their eyes on a number of
assets and Cyril's a key link to that," the analyst, who
declined to be named, said.
How the various deals and pieces fit together into the
bigger picture is key, the sources and analysts said.
"Optimum is a $1 billion deal but it's not so huge given
Glencore's size. For that, export allocation at Richards Bay
(Coal Terminal) was the most important thing of all, it's mostly
about getting access to RBCT," another industry analyst said.
Glencore declined to comment on the structure of its
partnership with politician-turned-businessman Ramaphosa or its
acquisition plans.
Cyril Ramaphosa, who has made no public comment on the bid
for Optimum, was unavailable for comment.
Equal partnerships
Whichever vehicles are used to buy assets, the shareholdings
will be equally split between Glencore and Ramaphosa as the
partnership expands, the mining investors said, one citing the
Shanduka Coal venture as an example.
"My feeling is that there is a whole strategy going there
around those coal assets between Shanduka and Glencore and so
on. At the end of the day you may well find that it all gets
wrapped into one thing," a Johannesburg-based analyst said.
"You have the same parties involved in all of this, and it
looks like there is some bigger strategy that involves all of
those smaller deals," he added.
A Shanduka group spokesperson said the transaction with
Glencore was not finalised and gave no details.
In coal, aside from Optimum, Glencore has made informal
approaches to get involved in the development of the Pegasus
coal reserve, a former BHP asset, which contains low phosphorous
coal used in ferrochrome production.
Glencore is also waiting for mining rights to BEE miner
Umcebo's reserves and mines to be transferred.
"It's not just coal, it's anything to do with mining where
the assets are good quality," a junior mining source said.
"Right now there are many smaller players who have debts and
need to cash out."