BHP to sell Optimum to BEE group

LONDON – BHP Billiton Energy Coal South Africa hopes to conclude the sale of its 13 million tonnes a year Optimum coal mine by the end of the second quarter to a black economic empowerment (BEE) group.

An internal BHP announcement on Friday said the consortium, led by Eliphus Monkoe, former chief operating officer of BHP’s South African coal operations, would be majority black-owned and controlled. The announcement did not give details of the price but sources close to the deal indicated that it was around US$300 million.Monkoe said that his consortium sees as priorities establishing a sound rapport with South African state power utility Eskom and pressing ahead with expansion of the mine.Eskom, a major client of Optimum, said when plans for the mine’s sale were announced that it would be prepared to block any buyer of which it did not approve.”We need to forge a solid relationship with Eskom and we will do so, as soon as possible,” he said.”The expansion of the mine will not be as difficult or as costly as some people have suggested,” he said.Some South African mining industry sources have said it could cost more than US$200 million to enlarge the mine.”The expansion will mostly be opencast, in areas which are not in the direct vicinity of the current mining operations,” he said.The consortium will set aside around 30 per cent of its equity for BEE interests, employees of Optimum Colliery and the surrounding community, he said.The expansion of Optimum will “ensure that the mine will continue to be a major producer for the export market whilst satisfying its contractual commitments to Hendrina Power Station,” the internal BHP announcement said.Eskom’s Hendrina power station, with capacity of 2 000 megawatts, is about 40 km south of Middelburg in Mpumalanga and is supplied direct by conveyor belt from Optimum with 6,5 million tonnes a year of coal.Nampa-ReutersThe announcement did not give details of the price but sources close to the deal indicated that it was around US$300 million.Monkoe said that his consortium sees as priorities establishing a sound rapport with South African state power utility Eskom and pressing ahead with expansion of the mine.Eskom, a major client of Optimum, said when plans for the mine’s sale were announced that it would be prepared to block any buyer of which it did not approve.”We need to forge a solid relationship with Eskom and we will do so, as soon as possible,” he said.”The expansion of the mine will not be as difficult or as costly as some people have suggested,” he said.Some South African mining industry sources have said it could cost more than US$200 million to enlarge the mine.”The expansion will mostly be opencast, in areas which are not in the direct vicinity of the current mining operations,” he said.The consortium will set aside around 30 per cent of its equity for BEE interests, employees of Optimum Colliery and the surrounding community, he said.The expansion of Optimum will “ensure that the mine will continue to be a major producer for the export market whilst satisfying its contractual commitments to Hendrina Power Station,” the internal BHP announcement said.Eskom’s Hendrina power station, with capacity of 2 000 megawatts, is about 40 km south of Middelburg in Mpumalanga and is supplied direct by conveyor belt from Optimum with 6,5 million tonnes a year of coal.Nampa-Reuters