The National Empowerment Fund (NEF) has concluded a R41,9-million deal to finance the buy-out of Colliery Dust Control (CDC), of Springs, by the company’s management and an empower- ment consortium led by former Eskom employee Babalwa Geza.

Established 30 years ago, the company pioneered the development of dust control systems used in underground coal mines. Currently, it boasts a 70% share of South Africa’s dust control systems market.

Geza was recently appointed CDC deputy MD and will take over from Doug Hutson as MD after the required skills transfer has taken place. She says the purpose of the transaction is “to take the company to greater heights”.

“Even though CDC has operated under the radar, it still maintained a 70% market share. “With more refinement and more finese at the head, we will, hopefully, be able to boost the market share and even branch into global markets.”

Hutson says that even with coal prices dropping, large volumes of coal are still being mined to supply Eskom’s power stations, meaning that demand for dust suppression systems in coal mines will remain strong. “Also, the Department of Mineral Resources maintains stringent dust control targets.

“The company has experienced some of its best financial months in recent times, even with the current economic conditions, and showed a R54-million turnover for the last financial year.”

The NFF’s Frencel Gillion notes that the fund is always looking to fund businesses that are viable in the long term. He adds that this deal represents another successful step in the transformation of the mining services sector with the empowerment support of niche support providers like CDC complementing gov- ernment’s transformation aims for the mining and energy sectors.

He adds that the transaction also repre- sents the empowerment of women in industry – about 35% of CDC shareholders are women. “Women with extensive experience in the fields of mechanical engineering, transformation and human resources play a vital role in the empower- ment consortium that now owns the company.”

Geza is excited about the challenges that lie ahead for the company. “The mining and energy sectors are of critical importance to South Africa, and providing coal in an efficient and safe manner is one of the country’s biggest challenges.

“This is why, as a company, we have set up a management trust and a staff trust to ensure that everyone has a stake in the future of the business, and to retain the knowledge and skills capital vested in our people,” she comments.

A staff trust with a shareholding of 10% has been created to reward the contribution of long-serving employees, some of whom have been with the company for 20 years and longer.

In addition, a management trust accounting for 20% of the shareholding has been created to incentivise management to grow the business in partnership with empowerment stakeholders. The trusts are also intended to foster broad-based black economic empowerment, resulting in 25 people having been empowered through the deal.

“The establishment of the trusts was fundamental to the deal,” says Geza. “By using these mechanisms, past effort has been recognised and rewarded, participation in ownership ensured, and our skills and experience base secured. “Now, with the support of our people, we are ready to take on any challenges that may come our way. Watch this space,” she concludes.

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