Glencore spends nearly $1 billion on Chevron’s Southern African oil business

Glencore will assume a 75% stake in Chevron’s Southern African assets after agreeing a US$973 million acquisition deal.

The transaction means Glencore will secure its first major refinery in Africa in line with its aim to expand through strategic acquisitions, which comes after inking a near $1 billion deal for a Latin American zinc miner.

The Swiss commodities giant will acquire a controlling stake in Chevron’s South African and Botswanan enterprises, which include a 100,000 barrel per day refinery in Cape Town and more than 800 gas stations.

“Glencore intends to manage its overall oil asset portfolio to ensure that, including this transaction, net additional capital investment is limited to less than $500m over the next 12 months, consistent with Glencore’s conservative financial framework targets,” said the Swiss company in a statement.

Chevron had agreed to sell the assets to China Petroleum & Chemical Corp, but the deal fell through when black economic empowerment (BEE) shareholders and an employment trust, who own 25%, activated a pre-emption right and began to look for a partner to finance a buyout.

Glencore’s purchase will place it as the second largest supplier of petroleum products such as diesel and gasoline in South Africa with a market share of 19%.

However, the Financial Times reported that sources suggest Glencore would look to reduce its stake by bringing in another investor, a regular strategy for the company on recent deals to stagger costs.

The transaction is expected to close in the middle of 2018.

@RGNOnline