New Grindrod combine expects to trade 8mt of coal a year

Effective since January 1, the Rotterdam-based Vitol – one of the world’s largest energy trading businesses – has acquired a 35% stake in the Maputo coal terminal concession from Grindrod for the equivalent of R548.4 million. In addition, the two will enter into a partnership (65% Vitol/35% Grindrod) to combine their respective sub-Saharan coal trading businesses. This, according to Grindrod Limited CEO, Alan Olivier, involves the Oreport subsidiary, which currently trades a quantity of coal. It will be amalgamated with Vitol’s SA coal trading business. “The contractual books of the two will be merged together, and initially we expect to trade about 7/8 m tonnes of coal a year,” he told FTW. “With rail expansion and the new development of TCM, this will be greatly increased.” Olivier also noted that the new Transnet Freight Rail / Swaziland Railways rail line between Lothair in the coal mining area of Mpumalanga and Swaziland would mean that the coal carried could also go down to Maputo. Grindrod also currently trades coal through Richards Bay. “Through our subsidiary, Navitrade, we have a 3-m-tonne coal terminal of our own at Richards Bay,” Olivier said, “connected to the dry bulk facility at the port.” On the Maputo coal terminal partnership with Vitol, Grindrod was awarded the concession to operate the Terminal de Carvão da Matola (TCM) until 2033, with an option to extend the concession for a further 10 years. According to information released from Grindrod, R567m has so far been invested in the refurbishment and building of infrastructure – expanding the capacity of the terminal to 6m tonnes per annum. Also the dredging of the Maputo port channel was completed in 2011, allowing larger vessels up to Panamax size to enter the port – while the Mozambique government, Mozambique ports and railways (CFM) and Transnet have agreed to promote the delivery of cargo by rail to the port. With capacity demand at TCM continuing to grow, a feasibility study for a R6.5 billion, 20-m-tonne expansion of capacity has been conducted. This Phase 4 project involves excavation and land reclamation – resulting in a footprint of 120 hectares, the construction of two additional berths, a stockyard and railway infrastructure. Olivier said: “Vitol is the ideal partner to assist us in the coal terminal in Maputo. “Their strong balance sheet will further assist in the opportunity to offer junior miners capacity in the terminal.” The transaction is subject to approval from the Mozambican government.