SIMON BROWN: I’m chatting now with Stefano Marani, CEO of Renergen. A disclaimer, I hold shares in Renergen. Stefano, I want to touch on the R1 billion that you kind of raised yesterday; there are some Ts & Cs. Before I do, phase one [of the Virginia Gas Project] – you were out there, what was it, already six, eight weeks ago, I suppose – must be close to being commissioned now?
STEFANO MARANI: It’s just a few weeks away, and it’s impressive to see. Literally now every single time that we go down, whether it’s five, six days a week or two weeks apart, you notice a visible change to the plant.
SIMON BROWN: So stuff is properly happening there. Let’s move to capital. It’s no secret that you need a, a fair chunk of cash for phase two, which is markedly bigger. At the president’s investment conference last week you said that you were going to [need] about R14 billion. You announced yesterday a billion from the Central Energy Fund. You announced just recently Ivanhoe Mines taking a stake in the business as well. It’s moving along. You are on track, I suppose in a sense. You’re starting to raise that cash and get proper money to make phase two happen?
STEFANO MARANI: Look, this process probably started in September last year, just after we announced the update in the reserves. So now we’re starting to see the fruits of all of that labour coming to fruition. I’ll be honest; compared to raising the capital for the first plant the first time around, it’s been significantly easier, also not without pointing out the obvious – that we’ve had some phenomenal tailwinds the last few weeks.
SIMON BROWN: Absolutely. The helium story just gets more and more weird almost sort of by the week to your point. You did that initial LNG [liquefied natural gas], which was a really, really small proof of concept, then the phase one. That was always a sense of de-risking, and I suppose proving to the world that the reserves are there – and certainly they are – and that you and your team can execute on this.
STEFANO MARANI: Yes. Look, there are always nay-sayers. I know for a fact that there are one or two geologists who are still running around saying that there’s actually no gas in the Free State at all. It’s like, really, have you seen any of the wells? But there are always going to be nay-sayers and, and it’s been a rite of passage. I think the most important thing over here is this needs to signal the start of South Africa’s gas economy. Look what it did to the US economy just after the financial crisis. We need that kind of tailwind for the country, and we believe that this is a good catalyst.
SIMON BROWN: It is. It’s that energy independence in a sense. If we sort of double down as a country on gas, and LNG and the like, it could significantly change. It’s not just the energy independence. We import – I don’t know how much – millions of rands [worth of oil] every day, which has impacts on our balance of trade.
STEFANO MARANI: Of all of the refineries, if memory serves, I believe only one is still operational out of –
SIMON BROWN: That too. Yes, yeah.
STEFANO MARANI: This is of itself just a disgusting fact. With any form of imported energy, whether it be LNG, whether it be diesel, petrol or just crude oil, ultimately what we are doing as a nation is we are paying someone else’s debt and equity returns for the plant that they construct to sell their fuels to us. The point you made – energy security is vital. The only way that this country is ever going to be able to sustain shocks of increasing fuel prices globally is if we have our own energy pool and, as great as renewables are – and I’m all for them – they’re not going to cut the mustard.
SIMON BROWN: Yes, and renewables [have] challenges. As you said, R14 billion is the ultimate target for phase two. You’ve got 140 days left to ink the deal with the Central Energy Fund. You’ve got the Ivanhoe Mines money coming in. Do you kind of start that process, even when you haven’t got the full R14 billion in the bank? In other words, you start it on the assumption that the rest will come as it goes along?
STEFANO MARANI: Look, I think that’s pretty much the only way that you can get these mega projects done; you’ve got to take a certain amount of risk on faith – and it’s paid off if you look at where we are at the moment, just in terms of what we’ve done to prove the geological reserve in terms of raising this equity capital. Now remember, these two institutions have been inside our data room, so clearly it can’t be that bad in there.
SIMON BROWN: They’ve had a good look-see, a good kick of the tyres. The Central Energy Fund, as I said earlier – what’s it, 140 days – you’ve agreed in principle. It has still got to actually be inked for the cash to flow. I was going to say a cheque to be written, but of course it’ll be in the EFT, won’t it?
STEFANO MARANI: Absolutely. It’ll be in EFT.
SIMON BROWN: With more zeros than we can usually count. We’ll park it there. Stefano Marani, CEO of Renergen, talking [about] their billion from the Central Energy Fund, which was announced on Sens yesterday.