Mining giant, Glencore has entered into an agreement to purchase 75 percent interest in Chevron South Africa, as well as a 100 percent stake in Chevron Botswana at a cost of $973 million.
The deal, comprises of interest in Chevron Group’s manufacturing, retail and industrial supply business in South Africa and Botswana, a release by Glencore said.
It will also include Chevron’s refineries, pipelines and petrol stations in the two southern African countries, which made a combined pre-tax profits of $138millliuion, last year.
The remainder of the business in South Africa will continue to be held by its current owner, Off The Shelf Investments Fifty Six (OTS), a group that was encouraged to buy up assets under South Africa’s economic empowerment rules designed to support historically impoverished communities.
“Glencore believes the assets provide an attractive downstream opportunity for its oil business. The acquisition will include undertakings to retain the local management team and workforce,” the statement said.
It added that, Glencore intends to manage its overall oil asset portfolio to ensure that, including this transaction, net additional capital investment is limited to less than US$500-million over the next 12 months, consistent with the group’s conservative financial framework targets.
The remaining 25 percent interest in Chevron South Africa is held by an empowerment partner.