Mmamabula project acquisition gets nod
Brian Benza | Thursday April 9, 2015 17:00
Through a special purpose vehicle (spv) specifically created for the transaction, Jindal will offload 74 percent in what is potentially Botswana’s largest coal energy and mine project to South Africa’s Glendal Trading.
In a statement released this week, the CA said they had determined to unconditionally authorise the proposed transaction on the grounds that analysis has shown that there were no substantive competition concerns that might arise in the market for the production of energy and coal on account of the proposed acquisition in Botswana.
“The proposed transaction is not likely to result in substantial lessening of competition, nor endanger the continuity of service, due to the absence of product overlap between the activities of the merging parties.
“Similarly, the implementation of the proposed merger is not expected to result in the merged entity attaining a dominant position, as the transaction is not expected to affect the current market structure.
“The merger is expected to benefit Botswana through job creation and growth of the energy and coal industries,” read the statement from CA.
In a recent interview with MmegiBusiness Jindal Botswana, Legal and Corporate manager Andre Bell said the disposal was a strategic move as the Indian firm looks to piggyback on Glendale’s potential ability to strike offtake deals that are needed for the monetisation of the 2.7 billion tonnes coalfields.
Jindal bought the Mmamabula Energy Project (MEP) from Canadian firm, CIC Energy for $116 million in 2012 after the 1200MW project suffered a still birth following numerous futile attempts to strike a power purchase agreement with South Africa’s Eskom.
Jindal will remain with a 26% shareholding and will also operate and manage the project.
Glendal have also formed a South African registered company called Mmamabula Power Plant Development (Pty) Ltd, which Bell described as a key South African element to the project. Jindal, which was granted a mining licence in October last year, plans to set up a 600MW power plant at MEP with the off takers likely to be Eskom.
There are potentially nine mines on the 2,7 million MEP resources, with six of them earmarked to be underground and three open casts. Jindal is one of the few mining and exploration firms that are at an advanced stage of monetising Botswana’s estimated 212 billion tonnes of coal resource.
Morupule Coal Mine is currently the only operating coal mine in Botswana supplying coal to Morupule power station and also exporting. Glendal Trading is owned equally by Jay & Jayendra (Pty) Ltd and XTLS Investments 33 (Pty) Ltd, which are both based in South Africa.
A share purchase agreement between the two parties was signed on February 2, 2015.
Jindal Botswana is owned by Jindal Steel and Power, which is part of an Indian international conglomerate with assets worth around $18 billion,