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Thursday, 19 January 2012

Vitol buys into Grindrod's TCM

19/1/12: The Rotterdam-headquartered Vitol Group has entered into an agreement with Johannesburg-listed Grindrod to acquire a 35% interest in the latter company's Maputo coal terminal concession, the Terminal de Carvao da Matola (TCM), in Mozambique for $67.7m.

At the same time, Vitol and Grindrod have also entered into a 65:35 partnership to combine their respective sub-Saharan coal trading businesses.

Grindrod holds the concession to operate the TCM until 2033 with an option to extend the arrangement for a further 10 years.

To date $70m has been invested in the terminal, boosting its capacity to 6m tpa.

However, demand for capacity continues to grow.

This has led Grindrod to undertake a feasibility study regarding a Phase Four expansion project that would increase capacity by an extra 20m tpa.

Requiring an investment of approximately $800m, this would involve excavation and land reclamation work resulting in a footprint of 120 ha and the construction of two new berths, a stockyard and railway infrastructure.

“Vitol is the ideal partner to assist us in the coal terminal in Maputo,” says Grindrod CEO Alan Olivier.

“They have significant experience in building terminals and they are a reputable global trading business.”

“Their strong balance sheet will further assist in the opportunity to offer junior miners capacity in the terminal.”

“I believe our shareholders and customers will benefit as through this transaction we have increased our capability to deliver on this strategic expansion project and we look forward to further developing our relationship with Vitol.”

“We are delighted to have concluded this deal with Grindrod,” adds Bob Finch, head of coal trading at Vitol.

“Both parts of this transaction create opportunities to underpin a significant expansion of our coal trading business, which is an increasingly important part of Vitol’s global trading activity.”

The transaction is subject to approval from the Mozambican government.

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