E&T Minerals Announces Bid for Optimum Coal Mine

17 September 2020

South African commodity trading and brokerage house E&T Minerals is one of the companies/organisations bidding for OCM (Optimum Coal Mine). The mine has been placed under business rescue since 2018. "We have been included in the business rescue plan published by OCM Business Rescue Practitioners (BRP) on 11 September 2020, and look forward to a set down date of the OCM creditor's meeting," says Mnweba Gobodo, E&T Minerals' chief legal officer.

E&T Minerals’ perspective on OCM journey

In October 2018, E&T Minerals joined the Optimum Coal Mine process through a bid introduced by the OCM Business Rescue Practitioners to become a post-commencement financier of the mine. The reason for the introduction of a post-commencement financier by the BRP was due to the fact that the business rescue process had not been concluded as expeditiously as the Companies Act had intended and the mine had begun to deteriorate even further due to the delay.

In order to halt the further deterioration of the mine, the PCF would have been utilised as an ‘interim working cap’ to handle utilities, employee back pay (employees had been unemployed for 12 months by this point - Feb 2018) and security against theft and looting of plant equipment on the mine. E&T Minerals entered its post-commencement financier proposition as independent bidders for the opportunity to breathe much-needed life into the mine simultaneously as the main acquisition bid proceeded.

As potential bidders to acquire the mine, it made sense to E&T to get on the mine as soon as possible to understand the problems the mine faced and to begin solving as much as was within its control from the gate. The transaction was built on capital that would see workers receive full back pay, payment of utilities on-site, opening of TFR and RBCT channels, mining contractors and mine management services on-site, leased equipment and a large off-taker to purchase the material. This was what it came to understand as the ‘working transaction’ and a precursor for its bid to eventually acquire the mine. Over time as E&T refocused its energy on acquiring the mine, the ‘working transaction’ was remodelled to a long-term acquisition solution with the same philosophies it had learned at PCF phase. This meant raising enough funding to actually acquire the mine with enough working capital to get the operations going as of yesterday and through its own structuring with enough security to protect the mine’s operations from pit to port.

Challenges faced

E&T Minerals found no joy from any national institution with the structures and capabilities to pull off a transaction of this size and nature. Although the company learned a whole lot from its meetings with national banks, large Insurers and national investment institutions (lessons it would always use to reassess and strengthen its working transaction that much more) eventually none had the desire to see it through.

The company soon realised that as a group of young entrepreneurs trying to conclude a transaction of this size on a controversial mining asset wasn’t going to raise the intended capital locally, so it extended its search offshore, which is where it found its main capital funders and other offshore partners that would help add weight, bankable balance sheets, experience and outright backing in an environment where E&T can be easily overlooked for the bigger older players.

The protracted conclusion of the BR process itself has been a long and difficult road for creditors and bidders, more so for the workers and creditors for blatantly obvious reasons. An asset of this size has had multiple bidders on the table with varying bid propositions since 2018, but two (inconclusive) s151 creditors meeting to vote for a preferred business rescue plan to show for it.

In order for business rescue to work the process has to be as transparent as possible and the elected solution needs to be focused on increasing operational capacity from the moment a BR plan is adopted.

About E&T Minerals

E&T Minerals is a southern African commodity brokerage and trading house specialising in coal and coal products. We also have the capacity to source various bulk metals, including chrome, iron ore and manganese, as well as bulk fuel. Our focus is on full transparency and finding long-term solutions that work for our customers. Our long-term goal is to become one of South Africa’s biggest coal exporters. The core of our operation is a small team operating from our offices in Sandton, Johannesburg, South Africa. We have deep knowledge of African commodities, logistics and business practices. We are able to draw on the expertise of long-established partners, both local and multinational, for services such as mining contracts, construction, logistics and trading.

E&T Minerals was established by two young entrepreneurs, Emmanuel Ngulube and Daniel Eyre, in 2013. In partnership with global coal traders HMS Bergbau. Ngulube and Eyre have a wide network of long-established key players in the southern African region, which has enabled the firm to endure and flourish through years of extreme volatility in global and domestic coal pricing.
P O P U L A R  P O S T S
Introducing E&T Minerals Future Goals
7 years ago Emmanuel Ngulube and Daniel Eyre formed E&T Minerals with the ambition of building a reputable black owned minerals trading and brokerage house.