Junior minor Wescoal trading arm Chandler Coal is in the process of merging with MacPhail Distributors.

This follows the unconditional approval of the R79-million acquisition by the Competition Commission in November.

Wescoal CEO André Boje tells Mining Weekly that the process is estimated to continue until the second quarter of the year.

“The MacPhail brand is strong across the country and Wescoal is mindful of its current customers that need to be taken through the rationale of the merger.”

The benefit of the acquisition is that Wescoal and MacPhail’s clients will have a larger coal supply business operating from eight depots in Gauteng, the Eastern Cape and the Western Cape.

The coal-trading market has been under pres- sure since 2008, owing to increased compe-tition from primary coal suppliers, resulting in reduced volumes and pressure on margins. The acquisition of MacPhail will enable Wescoal to attain the critical mass required to negotiate and overcome challenges in the coal-trading environment, says Boje.

Further, MacPhail and Chandler Coal’s knowledge of the coal market, the grade of coal that clients want to buy, and the business relationships that the two companies have honed over the years make the acquisition and integration of the businesses so important, says Boje.

This acquisition will also afford Wescoal sig- nificant synergies, such as cost savings, share-holder value and increased visibility and pre- sence in the marketplace. Wescoal staff involved in coal trading are being relocated to the Mac-Phail offices in Isando, east of Johannesburg.

The R79-million funding was secured from investment banking firm Investec Bank, while an additional R100-million was secured for working capital requirements from business finance provider Reichmans.

With MacPhail having always been the largest domestic trader of coal in South Africa, the combined group will continue to benefit from the increasing use of coal domestically, notes Boje.