Diamond mining giant De Beers Consolidated Mines on Tuesday concluded a major fuel supply deal and social investment in mining areas initiative with three black economically-empowered (BEE) companies as part of a R5,8-billion ten-year transaction.
The two deals already signed are with BP-linked Masana Petroleum Solutions (65% BEE) and Chevron supplier KZN Oils (100% BEE). Together, the tenders constitute the biggest portion of the three separate deals and are together worth R350-million a year over the next decade.
Masana will supply bulk fuels to De Beers’ flagship Venetia Mine and the Oaks Mine in Limpopo province; KZN Oils will supply the Voorspoed Mine currently under construction in the Free State.
A further supply contract is scheduled to be signed with Shell in the upcoming week for the supply of De Beers’ Northern Cape and West coast operations, including mines Finsch, Namaqualand and Kimberley operations.
The three companies will contribute to social investment and job creation initiatives in the areas to which they supply De Beers. This is an integral part of the contracts and will complement De Beers extant upliftment plans and augment them with new initiatives.
“This deal will contribute significantly to our BEE oriented procurement strategy, which has already achieved a 42% BEE level in spending R1,4-billion on supplying the local mines in 2006,” said De Beers MD David Noko.
“The R3,5-billion commitment by De Beers is by far the largest commitment by any organisation in our sector to a broad-based BEE company,” said Masana MD Sizwe Mncwango. What this deal is worth each year to Masana exceeds what the company, an empowered former division of British Petroleum, does in a year, he told Mining Weekly Online.
The company has already started supplying up to 250 000 litres of diesel a day to Venetia mine, equivalent to four or five diesel tankers. Mncwango added that it will shortly contribute its mining, dispensing and inventory management expertise to the operation.
KZN Oils MD Rajen Reddy estimated that a minimum of R700-million would accrue to his company over the next ten years from the transaction.
The company, Reddy explained, had already spent R0,5-million on social sponsorship projects since January 2007 - a commitment that was instrumental in winning it the tender for the as-yet unbuild Voorspoed.
Black-owned, black-managed and black-controlled Masana Petroleum Soultions is two years old in May. It was formed through a convergence of three partners, namely Mineworkers Investment Company (MIC), WDB Investment Holdings and BP South Africa.
For R265-million, BP acquired the commercial and industrial division of its operations for the empowerment of historically-disadvantaged South Africans. The result was bulk wholesaler of petroleum and related products Masana. HDSAs account for the majority shareholding - management and staff together hold 20%. BP SA has a 45% minority interest.
Masana shifts 700-million litres of product a year to prominent mining, construction and parastatal organisations. Clients include Rio Tinto, Lonmin and Imperial.
Transport and freight dynamics company KZN Oils is 100% BEE affliate of Chevron. The two companies have a supply agreement that nevertheless does not give Chevron shareholding. BEE company Phaphama has a 26% stake in KZN Oils. The company supplies fuel, diesel, petrol and lubricants to such clients as Transnet, the Ports Authority and a portfolio of municipalities.