12 June 2016
OAKBAY SETS THE RECORD STRAIGHT ON OPTIMUM COAL MINE AND ESKOM, 12 June, 2016
Johannesburg, South Africa – Sunday 12 June 2016: Oakbay Investments wishes to set the record straight on operations at the Optimum Coal Mine (owned by BEE company, Tegeta Exploration & Resources ("Tegeta") in which Oakbay has a 29% shareholding) and its relationship with Eskom, the electricity public utility.
In the last few months, Oakbay has been appalled at the constant innuendo circulated and printed by media about the company, based on faceless sources and zero evidence. In recent days, Oakbay has received 21 questions from 'Carte Blanche', the M-Net television series, regarding Optimum, Eskom and the supply of coal to the Arnot power station.
We initially referred their questions to Eskom, but yesterday Oakbay offered Carte Blanche an interview with its CEO, Nazeem Howa, either live or pre-recorded, on the proviso that the interview would be aired, unedited. This offer was to guard against selective editing and yet more lies and baseless allegations being disseminated.
Both offers were rejected by Carte Blanche. Allegations have also appeared in today's CityPress newspaper.
To ensure South African citizens hear the truth about the subjects above, Oakbay's CEO has participated in a 40 minute interview addressing the key issues.
This interview can be accessed on the Oakbay Investments website http://ioakbay.co.za/nazeemhowa.html
Additionally, Oakbay's answers to all 21 questions can be read on the Oakbay Investments website (oakbayinvestments.co.za)
Optimum was acquired by Tegeta, from Glencore, in April 2016, whilst Optimum was in 'business rescue' status, in a transaction which received all regulatory approvals, and saved over 3000 jobs at Optimum.
The transaction was funded through a mixture of existing funds and debt and, as in any transaction, proof of funding was required ahead of deal signature. This proof was provided in December 2015. It was further stipulated in the sale agreement that bankers who had advanced loans totalling R2.5 billion to Optimum would have to agree to the transaction by 31 March 2016 before the deal could close. This approval was based on our ability to prove we could fund the deal.
Since deal closure, Tegeta has increased coal production at Optimum from 400,000 tonnes a month (at the time of acquisition) to 800,000 tonnes per month and in the next month will hit the 1 million tonnes milestone. This coal is of the highest quality which meets Eskom's stringent testing regimen.
Price and Efficiency
Most importantly, Tegeta supplies coal to Arnot power station at an average price of R583 per ton. This compares with the previous supplier's price of R980 per ton and the new rate it proposed of R1,360 a ton.This huge saving for Eskom, generated by Tegeta, directly benefits South African taxpayers and citizens:cheaper energy.
Eskom subsequently approached Tegeta's management team to increase its supply of a high calorific value coal to Arnot for the winter months. As the company was in business rescue and therefore did not have any credit facilities, Tegeta initially declined as it was also facing closure of its banking arrangements. Following several rounds of negotiation the parties agreed to a pre-payment as Eskom needed the supply to guarantee security of power during the cold winter months. In addition, Eskom asked Tegeta to agree to a further discount on the pricing in exchange for the prepayment. It is our understanding that Eskom has made pre-payments to other clients when faced with similar circumstances, so it is a malicious lie to suggest that special treatment was given to Tegeta.
Currently, Tegeta supplies less than 5% of Eskom's total coal supply - in some instances at the lowest rates.The supply of the remaining 80% comes from the same companies who have been supplying for decades, several on a 'cost plus' basis, which means Eskom funds both their operating costs and their capital costs - a gravy train all funded by South African taxpayers. Tegeta, on the other hand, has only been a coal supplier to Eskom for a mere 16 months.
Oakbay openly asks:
Why doesn't media scrutinise this 80%?
Why is media not interested in the decades of exploitation of South African taxpayers by the same major mining companies, via the cost plus model?
Nazeem Howa, Chief Executive of Oakbay Investments, said:
"It is disappointing, but not surprising, that Carte Blanche could not agree to a live or unedited interview. There is a politically-driven agenda against Oakbay which many media houses give oxygen to by perpetuating allegations with zero evidence supporting them. Allowing an unedited interview doesn't suit our detractors and the media they have captured."
"Oakbay is happy to receive scrutiny on any of its transactions as each deal has been done in a transparent, arm's length manner with pricing negotiated by a willing buyer and willing seller."
"We are competitive in everything we do, including price. By also operating efficiently, we are shining a light on decades of exploitation of South African taxpayers by the major mining companies and they don't like it."
"South Africans have heard the word 'capture' many times in recent months. We are happy to face any scrutiny within the context of the entire mining industry and know that on a like-for-like basis, it is very easy to see where the preferential treatment and capture is."payers by the major mining companies and they don't like it."
Notes to Editors:
For more information, please contact: email@example.com.
About Oakbay Investments and the Gupta family
Oakbay Investments (oakbayinvestments.co.za) has invested more than R10 billion in South Africa. Oakbay Investments is 100% transparent - all numbers have been verified by one of the world’s most respected accountancy firms.
The Gupta family has a 23-year history of strong business performance and turnaround skills. This strong performance has come almost entirely via successful activity in the private sector, with less than 1% of the Group’s revenue coming from government contracts.
Sector diversification has also enabled Oakbay companies to deliver consistent growth and job creation throughout times of both economic boom and bust. For example, 47,000 jobs have been lost in South Africa’s mining sector between 2012 and 2015. In contrast, Oakbay’s mining companies have created 3500 of jobs in the sector.