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Miner and commodity trader Glencore has announced that it has entered into an agreement with Off The Shelf Investments Fifty Six (RF) Proprietary Limited (OTS) to acquire a 75% stake in Chevron South Africa as well as the entire issued share capital of Chevron Botswana. The purchase will include the interests of the Chevron group in its manufacturing, retail and industrial supply businesses in the two countries.

“Glencore believes that the Assets provide an attractive downstream opportunity for its oil business. The acquisition will include undertakings as to retention of the local management team and workforce,” the company said in a statement.

Glencore buys local Chevron business

The deal, subject to adjustment for debt and working capital of the companies at closing, is valued at $973 million. It will be funded from Glencore’s own cash resources. Glencore intends to manage its overall oil asset portfolio to ensure that, including this transaction, net additional capital investment is limited to less than $500m over the next 12 months, consistent with Glencore’s conservative financial framework targets, it said.

The transaction is conditional on the receipt of all necessary regulatory approvals by OTS and Glencore and is expected to be concluded next year. The completion of the sale will secure the first major refinery in the continent for Glencore (producing 100 000 barrels per day), as well as a lubricants plant and a network of around 820 petrol stations.

This announcement comes after Chevron's Black Economic Empowerment partners – who own a 25% stake in the South African assets – reopened the sales process following a deal concluded with Asia's largest oil refiner, China Petroleum & Chemical Corporation SNP (Sinopec). Last year, Chevron announced its plans to unload 75% of its interests in the South African assets as part of a three-year divestment plan, announcing Sinopec as the winning bidder. However, the deal was delayed, and Glencore was selected due to the better terms and conditions it offered.

The announcement of the local deal comes shortly after Glencore agreed to take a bigger stake in Latin America’s top zinc miner. Glencore will acquire 27% of Peru’s Volcan Cia. Minera SAA’s Class A voting shares for $531 million.

Image: https://www.flickr.com/photos/miriammannak/2765100862
Credit: Flickr/Miriam Mannak

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