Epangelo left out in the cold
State owned mining company, Epangelo has been left out in the cold after reports emerged this week that Swiss-based commodities trader, Glencore has been offered Exxaro’s 50.04% stake in Rosh Pinah Zinc and Lead mine in a deal worth US$56 million.
Following the announcement by diversified South African-based resources group Exxaro, that it plans to divest in its Zinc assets “because of the difficult conditions of the zinc market, including its cyclical nature, low margins as well as the significant impact of higher electricity prices and the exchange rate”, Glencore is understood to be the front runner to take over Exxaro’s assets in the country.
In an interview with the Economist this week, Epangelo’s MD, Eliphas Hawala said his company was not invited to submit its bid to acquire Exxaro’s majority stake in Rosh Pinah Zinc and Lead mine. He said he only heard through the grapevine that Vedanta and Glencore were bidding for the Exxaro’s assets.
Asked whether or not Epangelo was interested in bidding for Exxaro’s stake, Hawala said they needed to get more information on the mine before committing themselves.
“If there is an opportunity we will look at it but first we need to get details of exactly what is going on. Once all the facts are on the table then we will make a decision.
“Whether we accept the deal or not will depend on due diligence and our ability to convince someone to fund the project on our behalf,” Hawala said.
He however said it is difficult to convince potential financiers to fund a project which is at the tail end of its life of mine.
Exxaro’s current portfolio of zinc assets includes the Zincor refinery, a 50.04% interest in the Rosh Pinah zinc and lead mine, a 26% interest in Black Mountain (Pty) Ltd, which owns the Black Mountain zinc and lead mine and the Gamsberg zinc project, as well as an effective 22% interest in the Chifeng zinc smelter in China.
Announcing plans to close the Zincor zinc refinery in South Africa where the zinc concentrate from Rosh Pinah mine is processed, Exxaro’s CEO, Sipho Nkosi said in October that losses at the refinery had influenced the company’s decision.
“Issues that have influenced the Board’s decision to take an in-principle decision to permanently cease zinc production at Zincor include the fact that Zincor as a zinc-making operation has proved to be un-saleable to potential investors; continued zinc-making is financially unsustainable with Zincor incurring mounting financial losses; and turn-around and improvement interventions have proved fruitless and are unlikely to get Zincor on to a sustainable financial performance level.”