Wednesday, May 5, 2021

Jindal Steel tightens grip on Mmamabula

The Competition Authority (CA) on Monday released a statement saying it had received a merger notification for the proposed acquisition of 74 percent shares in Jindal BVI Ltd by Glendal Trading (Pty) Ltd.

Post implementation of the transaction, Glendal Trading will own 74 percent of Jindal BVI Ltd while the remaining 26 percent will be owned by Jindal Steel and Power (Mauritius) Limited. Jindal BVI, a wholly owned subsidiary of Jindal Steel and Power (Mauritius) is a major player in Botswana’s mining industry and owns companies like Jindal Resources, Trans Africa Rail, Jindal Energy, Meepong Resources, Meepong Energy, Meepong Services and Meepong Water. On the other hand, Glendal Trading is an investment holding company which currently owns Mmamabula Power Plant. The company is owned by Jay & Jayendra and XTLS Investments 33, which are both based in South Africa.

Through the notification, the CA was seeking stakeholder views for or against the proposed merger as per section 57(3) of the Competition Act. In 2012, Jindal BVI, a subsidiary of Jindal Steel and Power, acquired Canada-listed coal company CIC Energy for about $115 million by merging Jindal BVI with Jindai Steel and Power (Mauritius) Limited. The deal gave Jindai Steel and Power access to CIC energy’s high-quality thermal coal in the greater Mmamabula coalfield, estimated to be in excess of 6 billion tonnes. It also presented Jindai Steel and Power with a great opportunity to exploit the power-deficit in South African Development Community (SADC) countries.

When it was bought by Jindal Steel and Power, CIC Energy was just recovering from a collapsed mega deal in which it would build a 1200-megawatt (MW) power plant at Mmamabula for export to South Africa. The private steel maker, with stakes in coal mines in South Africa and Mozambique, committed to investing $700 million over the next three years to set up power generating facilities at CIC Energy. Hopes of a windfall power demand from South Africa were raised once again last year when South Africa invited Independent Power Producers (IPP) to submit proposals to build coal-fired plants to supply trouble ridden Eskom as part of efforts to alleviate the country’s chronic electricity shortages.

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