Page 9 - AfrElec Week 34 2021

AfrElec INVESTMENT AfrElec

JPMorgan Chase backs South

African black-owned enterprises

SOUTH AFRICA JP Morgan Chase has launched a $20mn to back many independent power producers (IPPs) that
black-owned enterprises in South Africa in wel- aim to provide an alternative to state-owned
come news for a country that is suffering from Eskom.
slow economic growth and regular power cuts. Black-owned miner Seriti Resources was
The fund was launched in partnership with recently cleared by the government and Eskom
South Africa’s Department of Trade, Industry to acquire the coal assets of South32. The deal
and Competition (DTIC), the bank said, Reu- involves Eskom agreeing to a new coal supply
ters reported. agreement at its Duvha power station.
The bank is taking a bullish view on South Seriti is a 91% black-owned coal producer, so
Africa, even though the coronavirus (COVID- the deal dovetails with the government’s drive to
19) pandemic shrank the economy by 7% in raise black ownership in the mining sector.
2020, the World Bank estimated, after growth of Exxaro, a major coal producer as well as of
just 0.2% in 2019. iron ore and energy, has sought opportunities
However, the economy grew by 1.1% in the in greener energy and acquired full ownership
first quarter of 2021, according to government of two wind farms in the Eastern Cape province
figures in 2019.
“The South African private sector has great It said earlier in 2021 that it would stop invest-
capacity to multiply impact through partner- ing in new thermal coal assets, although it will
ships, as we are aiming to do with the DTIC,” said continue to produce and supply coal for domes-
Kevin Latter, JP Morgan’s senior country officer tic and international customers,
in South Africa. Latter did not say at what interest rate the
The ZAR300mn ($20mn) fund, which is bank would offer the loans, but said they would
accompanied by a grant of ZAR40mn ($2.7mn), be “heavily subsidised and below commercial
will be disbursed as short-term loans with a rate.”
duration of about three to four months and long- The fund could potentially unlock ZAR2bn
term loans with a duration of two to five years, ($134mn) in capital over an eight-year period
Latter said. and would create hundreds of jobs, said South
The country’s black-owned businesses play a African Minister of Trade and Industry Ebrahim
key role in the power and coal sectors, backing Patel.™

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