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Glencore raises Optimum stake to 23.9%

Glencore, the world’s largest commodity trader, said on Tuesday that it had almost doubled its stake in South African takeover target Optimum Coal to 23.9%.

Glencore said in a statement it had bought about 24.6-million shares at an average price of R37.98 a share on Monday.

Optimum’s shares were down 2.20%, lagging slight gains on Johannesburg’s wider all-share index.

The price paid considerably more than the R34 per share that a consortium of Glencore and a company owned by its South African partner, politician-turned-tycoon Cyril Ramaphosa, had publicly offered.

That valued the company at around $1.1-billion.

It is the Swiss-based trader’s largest takeover bid since its May stock market listing.

Glencore’s deep pockets and Ramaphosa’s influence would make for a formidable bid that could nullify any opposition from unions or shareholders, some of whom may be reluctant to see the trader extend its reach in South Africa.

The drive into South African mining also comes amid investor uncertainty about regulatory requirements such as black ownership targets as well as nationalisation talk, steeply rising costs and labour militancy.

Chinese metals giant Jinchuan is in the process of taking over South African-listed miner Metorex but it will be delisted in Johannesburg and its copper and cobalt operations are elsewhere in Africa, so it has no exposure to domestic political risks.

But South African coal assets still look promising given Asian and local power utility demand and the country’s location with shipping access to the Indian and Atlantic Oceans. — Reuters

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