TV Star Joins Vitol in Stake in Biggest African Coal Port
A South African coal entrepreneur who produced and starred in a reality TV show set in Cape Town has partnered with one of the world’s biggest commodity traders to buy a stake in the continent’s largest terminal for the fuel.
Through Burgh Group Holdings, 38-year-old Quinton van der Burgh joined with Vitol SA to buy a 7.6 percent stake in Richards Bay Coal Terminal on South Africa’s northeastern coast. They have the right to ship about 7 million metric tons of the fuel annually, strengthening Vitol’s position in the coal trade in a country that’s a key supplier to Asia.
The two bought the holding from a company part-owned by the Gupta family, who are friends with President Jacob Zuma. Critics accuse the leader of allowing the family to use their connections for financial gain, which he and the Guptas deny. While the country is Africa’s biggest coal producer, its export capacity is constrained by limited port infrastructure. Only shareholders, who include Anglo American Plc, have an automatic right to ship through the terminal.
“Everyone knows that we and Vitol were very close,” Van der Burgh said in a Sept. 23 interview. “We knew that allocation was lying and no one was doing anything with it.” His company spoke with the trader, who in turn approached the Guptas’ Tegeta Exploration and Resources Ltd., asking whether it could use the terminal or if the producer was willing to sell its portion, he said.
Family Business
Van der Burgh and his brothers Wayne, 44, and Stanley, 41, started the company for which Quinton is the chief executive officer 14 years ago, funding it themselves and focusing on mine prospects, he said.
“In those days we weren’t even thinking exports—it wasn’t within our grasp to actually understand it or even finance it,” he said. “We started realizing five years ago that if you don’t own infrastructure and you don’t have a footprint, you don’t have a gateway to sell your coal.”
Today, the company has six operational mines and 26 prospecting licenses, and sells about 200,000 tons of coal monthly to the state-owned power company, Eskom Holdings SOC Ltd. In December, Burgh and Lurco Group, which is controlled by black investors, bought the Inyanda coal-washing plant and rail siding from Exxaro Resources Ltd., which the partners will use to process the fuel for the utility.
Inyanda and many of Burgh Group’s other operations are in the coal-rich areas surrounding the Mpumalanga province town of Witbank, where Van der Burgh has a lake-side mansion with a swimming-pool-sized aquarium, a bowling alley and a glass staircase over water fountains. Opulent homes also feature in The Shores, a series Van der Burgh produced about four American women who travel to Cape Town to work for him.
Oscar Pistorius
In 2012, the Star newspaper reported that Van der Burgh laid a charge of intimidation against Oscar Pistorius, who was sentenced to six years’ imprisonment for murdering his model girlfriend Reeva Steenkamp. The Paralympian had allegedly approached the businessman at the VIP room of a Johannesburg racetrack and swore at him about his relationship with a woman, according to testimony in his trial.
Other businesses in the group include a plant-hire unit, a bottled-water venture and a clothing line designed by Cape Town-based Courtney Cousins. The reality show was produced by Van der Burgh’s Q-Up Entertainment, according to his website.
Van der Burgh got to know Vitol just over two years ago, when the trader began to market his company’s coal, shipping 50,000 to 100,000 tons monthly in 2015. Access to Richards Bay will allow Burgh Group to open up the reserves it’s been developing for the last five years, the CEO said. It plans to increase coal-operation employees to 1,000 from 600 next year and double the amount for overseas shipment to 1 million tons monthly by then.
The agreement with Vitol and the Gupta family’s Tegeta, announced Sept. 16, is still subject to conditions, including approval by shareholders of RBCT. Tegeta bought Optimum Coal, which included a mine and its stake in the terminal, for 2.15 billion rand ($156 million) from Glencore in December.
“I hope it’s going to be favored, in the context that we’ve got a very good standing relationship with Exxaro, with Anglo, with South32,” he said, referring to some of the terminal’s shareholders.
South Africa
Burgh Group is committed to its operations in South Africa, where coal prices have climbed 55 percent this year but are still 64 percent off a 2011 peak of $189.75 a ton. Anglo wants to sell its local coal mines to help cut debt and South32 Ltd., which was spun off from world No. 1 miner BHP Billiton Ltd. last year, says it won’t start any new energy-coal operations in the nation.
“Anglo American is selling, South32 is not really going to develop much more in this country, Exxaro is also going to be selling off a few of their assets,” he said. “We are the aggressive ones trying to develop these assets and develop in the country. Where everyone is calling bloody murder in a bad coal market, we’re seeing the light at the end of the tunnel.”
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