Diversified mining and marketing company Glencore is doing whatever it can to assist Eskom in overcoming its current coal supply issues, Glencore CEO Ivan Glasenberg has told Mining Weekly.

“We’re looking at trucking coal and railing coal 24 hours a day, seven days a week to assist them on their current supply issues, and, yes, we continue to sign new contracts and work with Eskom to overcome their existing problem,” Glasenberg said.

Eskom Management Asked by Mining Weekly about the state of the company’s relationship with the new Eskom management, Glasenberg described it as being “very good”.

He was speaking to the media after earlier outlining to investors how Glencore was supporting ongoing economic development in Asia through its supply of affordable, premium quality high-energy thermal coal to that continent.

On the company’s support of South Africa’s State electricity utility, he said that Glencore was in regular discussion with Eskom, which, he said, clearly required more coal at its power stations.

The coal tonnage that Glencore would supply to Eskom in 2019 would definitely be higher than the tonnage in 2018, Glasenberg said.

There were no developments to report on Glencore potentially reacquiring Optimum Coal, a supplier to Eskom, which is in business rescue.

Gary Nagle, who has been based in South Africa as head of Glencore’s ferroalloy assets, will be relocating to Australia early next year following his appointment as head of coal assets. Nagle will be taking the place of Peter Freyberg, who has been appointed head of industrial mining assets, a newly created position with oversight and responsibility for all Glencore’s mining assets. Japie Fullard replaces Nagle as head of ferroalloys and Freyberg will be relocating to Switzerland.

Nagle will take over all coal operations worldwide, with Murray Houston continuing to head Glencore’s South African coal operations.

Glasenberg said that Nagle would be travelling to South Africa frequently, as had been the case with Freyberg.

Chevron Deal

Regarding the takeover of Chevron South Africa, Glasenberg said the transaction was progressing well and that the company was working on Glencore coming in as a shareholder.

“We should get all the approvals early next year and Glencore will take its shareholding direct in the Chevron assets,” he said. Glasenberg added that presentations to the South African government had taken place to obtain competition authority approval.

The acquisition of Chevron South Africa is taking place in partnership with South Africa’s black economic empowerment consortium, Off The Shelf Investments, which has taken over the Chevron refinery, in Cape Town, as well as the Caltex brand, in a deal valued at $1-billion and financed by Glencore as Off The Shelf’s technical and financial adviser. Off The Shelf also has full ownership of Chevron Botswana.

Off The Shelf chairperson Mashudu Ramano describes the “milestone” Chevron transaction as one that has resulted in the creation of a standalone, black-owned energy company that will be managed by South African citizens.

The new owners have six years to transition away from the Caltex retail brand.

“We’ll roll that out over time,” Glasenberg said.

The consortium will bring in crude oil, run the refinery and take over the full South African retail distribution, with the investment in the downstream oil business in South Africa providing the short for Glencore’s oil trading business.

This mirrors what Glencore is doing downstream in Mexico and Brazil. At the midyear, Glencore Energy signed an agreement to acquire 78% of Ale Combustíveis, Brazil’s fourth-largest fuel distributor, which has a network of 1 500 retail stations in 22 states, as well as about 260 convenience stores. This followed investment in the Mexican downstream business through G500.

Solid Demand

Glencore reported solid demand for its commodities and said that the current low level of inventories was likely to fall still further.

The company’s diversified portfolio is described as one which is enabling the transition to a low-carbon economy, while also providing access to affordable coal energy.

Its resilient marketing business and low-cost industrial assets underpin free cash flow generation of some $7.5-billion from earnings before interest, taxes, depreciation and amortisation of $17.1-billion.