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Vitol drops plan to buy Gupta stake of Richards Bay Coal Terminal

The purchase would have given the company access to a key export facility in one of the largest coal-producing countries.

Vitol Group, the world’s largest independent oil trader, walked away from a deal to buy a stake in the Richards Bay Coal Terminal from a company controlled by South Africa’s Gupta family.

“The consortium comprising Vitol and Burgh Group Holdings will not be proceeding with the acquisition,” the commodities-trading house said in a statement on Monday.

The proposed deal, first reported by Bloomberg News in September 2016, would have seen Vitol and South Africa’s Burgh Group acquire Optimum Coal Terminal from the Gupta’s Tegeta Exploration and Resources. It would have given the investors a 7.61% stake in Richards Bay and rights to ship about 8 million metric tons of the fuel annually from South Africa, a key supplier to Asia.

The Guptas are friends with South Africa’s president Jacob Zuma. In December 2015 the family, along with Zuma’s son Duduzane, bought Optimum through Tegeta for R2.15 billion ($163 million) from miner and trading house Glencore.

The purchase would have given Vitol, which handles more than 7 million barrels of oil a day and more than 30 million tons of coal annually, access to a key export facility in one of the largest coal-producing countries. Vitol has trading and marketing operations in South Africa and its VTTI unit is building a fuel-storage facility in Cape Town. In 2012, it formed a coal-trading company in neighbouring Mozambique by buying a stake in a terminal that exports coal from South African mines.

While South Africa has quality coal reserves and is well positioned to export the fuel to India and China, shipments are constrained by limited port capacity. Only shareholders have an automatic right to export through Richards Bay, which accounts for almost all of the country’s coal-shipping capacity. Other investors in the facility include Anglo American, South 32, and Glencore.

Oakbay Resources and Energy, a mining company controlled by the Guptas, will delist from the Johannesburg Stock Exchange this month after if was unable to find a new transfer secretary or sponsor to comply with exchange rules.

In November, South Africa’s anti-graft ombudsman published a report saying Zuma and some ministers may have breached the government’s code of ethics in their relationship with the Gupta family.

Companies controlled by the family were dropped by their South African bankers and auditors last year and Bell Pottinger, a UK-based public relations firm, said in April it no longer represents the Oakbay Investments holding company.

© 2017 Bloomberg

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