JOHANNESBURG (miningweekly.com) - The Competition Tribunal conditionally approved the tie-up between Tegeta Exploration and Resources and embattled Optimum Coal as the deal did not present competition concerns.
Unpacking the reasons for giving the green light for Oakbay Investments- and Mabengela Investments-controlled Tegeta’s takeover of Optimum assets, the tribunal said that, overall, a post-merger Tegeta would supply less than 5% of State-owned Eskom’s coal requirements.
“The deal does not substantially prevent or lessen competition in any relevant market,” the tribunal said in a statement on Wednesday.
While Eskom was Tegeta’s largest customer, with the balance of coal supplied into the domestic market, Optimum supplied coal to the domestic market with minimal exports, and held what it called "unprofitable contracts" with Eskom.
“The merger leads to an overlap in the activities . . . [however,] since the respective mines are not competitors to supply the power stations located near them, the merger does not lead to a geographic concern,” it said.
Optimum was currently under business rescue, a situation Tegeta was confident of resolving through a change in mining methods and an increase of supply so that some coal could be exported at higher costs.