A consortium led by State-owned mining company African Exploration Mining and Finance Corporation (AEMFC) has been awarded the post-commencement funding (PCF) bid for Optimum Coal and its associated assets to the value of R1-billion.
PCF is finance granted to a company in business rescue and is meant to address the business rescue practitioners’ (BRPs’) remuneration, employee costs, working capital and other means of maximising the probability of a successful turnaround.
The consortium, which includes coal and chrome beneficiation and trading company Lurco Group, stated that it and the BRPs are expected to conclude the details of the management contract – with an option to buy the assets – relatively soon.
Ownership of Optimum is still subject to an ongoing bidding process.
In the statement released on Tuesday, BRP lead lawyer Bouwer van Niekerk said it had been a “robust and rigorous” process to identify the right partner in securing sustainability for the Optimum assets, including the Optimum coal mine and coal terminal.
He added that the BRPs considered both the capacity to deliver on the funding requirements, as well as a proven ability to manage and operate the mine and bring it back to optimal production.
Funding will be used to pay workers, suppliers and creditors, as well as to recapitalise the mine.
The AEMFC stressed that the compensation of workers was a critical priority.
So too is achieving shared value by providing a structure in which the communities and workforce surrounding the assets will benefit from ownership in the asset and operations.
“We are confident that the PCF award to the AEMFC consortium will see the prioritisation of sustainable employment and operational efficiency while keeping energy security for South Africa at the centre of its strategy.”
The AEMFC consortium confirmed that it had the guaranteed funding ability and operational expertise to create a commercially viable business and that it plans to exercise its right to acquire the mine as soon as the litigation is resolved.
Lurco Group CEO and co-founder Ellington Nxumalo affirmed that the consortium’s funding had been raised by it members, with assistance from private capital.
“Securing South Africa’s energy supply [while] saving jobs, driving transformation, leveraging sustainable investment and restoring the reputation of South Africa as a key resources player should be a non-negotiable business imperative for all committed sector leaders,” stated Central Energy Fund chairperson Luvo Makasi.
He added that the CEF was encouraged by the consortium’s commitment to delivering a solution based on “sound commercial fundamentals”.
AEMFC CEO Sizwe Madondo added that the company was “delighted” to have been awarded the PCF deal as it believes that it is of national significance and is fundamental to the country’s energy security.
“Through our consortium team of reputable and experienced sector experts, we are confident we can deliver the sustainable Optimum Coal that South Africa both deserves and needs.”