Mining investment company Menar, part of recently formed coal mining investment company Sibambene Coal, a 51% black-owned entity, is looking for opportunities in the South African coal sector.

“We are considering a few ideas around coal in terms of assets for possible acquisition and the innovative management of such assets to deliver genuine empowerment and shareholder value. Together with the shareholders of Sibambene, we can make a positive impact on the coal sector at a time when many people are negative towards coal,” says Menar MD Vuslat Bayoglu.

“The debate about climate change has had a negative impact on coal and, if it is not properly managed in South Africa, it could result in a decline in the development of new coal mines at a time when we still need coal-fired [electricity] to power up the economy back to a growth trajectory.”

Should plans go well, Menar will ensure that Sibambene contributes to the optimal supply of coal in South Africa, while introducing new players in the coal mining space.

While Menar currently does not own huge reserves, Bayoglu says: “We think that, in terms of the regulatory framework, we can make small and big acquisitions that will not cause overconcentration of ownership and risk.”

As the company does not have significant debt, Menar’s new financial commitments will be focused on ensuring that the assets that Sibambene Coal acquires are optimally developed.

Through its subsidiary – exploration and project development mining company Sitatunga Resources – Menar acquired the East Manganese mine project, in Hotazel, in the Northern Cape.

“We recently received all regulatory approvals and appointed a manager for the operation. Plans are advanced to start operations to produce 30 000 t of manganese a month. We are excited about the project because this is not only our first exposure to manganese but also our first diversification venture away from coal,” Bayoglu says.

Moreover, Menar has transitioned from being a junior miner to a midtier producer, which started with its involvement in coal. The company is partnering with other players in the market in the search for new investment opportunities, while trying to diversify into manganese and chrome. “Minerals Council South Africa, in its latest publication, listed Canyon Coal, one of our investee companies, among the main coal producers.”

Bayoglu notes that junior miners will find it difficult to make inroads into the platinum and gold sectors, as they are highly capital intensive. While coal is ideal as an investment, success depends on the investment approach.

“If the investor is sensitive to short-term price fluctuations, the first quarter of 2019 would not have been ideal because the price of coal has been under pressure. Therefore, it depends on the risk appetite of the investor and the capital at the investor’s disposal.”

Bayoglu believes that the advantage of being a junior miner is a growth-orientated attitude. It is only when a company grows into a major that its investment appetite begins to wane as it seeks to maintain or optimise existing assets, he concludes.