LontohCoal may double IPO to $1bn for Zim mine


LontohCoal Ltd, set to be the first African company to list in Hong Kong, may double the size of its share sale to as much as $1 billion to develop a coal operation in Zimbabwe.

The initial public offering (IPO) proceeds will accelerate our ability to get into the construction phase, chief executive officer Tshepo Kgadima said today in an interview in Hong Kong. Sandton, South Africa-based LontohCoal plans to list in the first half, he said.

Globally basic material companies, including miners, boosted IPOs by half to $23 billion last year as China, the biggest resource consumer, continued purchases. China will buy as much as 80% of LontohCoals planned exports.

There will be follow-through financing either through a bond issue or by coming back to the market and issuing more equity, Kgadima said.

LontohCoals Lubimbi operation will include a $5,5 billion coal-to-liquids plant, a 1 200km slurry pipeline and a port in Mozambique.

The port and pipeline may cost between $1,3 billion and $1,5 billion, he said. The company may consider a joint venture partner for the pipeline.

The Lubimbi project, which is 51% owned by LontohCoal and the remainder by local shareholders, will produce 46 million metric tonness of thermal and coking coal a year, Kgadima said. The conversion plant will be able to produce 50 000 barrels per day, Kgadima said.

Rio Tinto group and Vale South Africa are also investing in ports in Mozambique to serve their mines in the nation. Rio Tinto signed an agreement today with Ncondezi Coal Ltd to study construction of a port and railways, according to Ncondezis statement.

Vale, the worlds largest iron-ore producer, is investing $4,4 billion to upgrade its Nacala port and build a 912km railway line.

Samsung Securities Co is advising LontohCoal and the company is seeking to appoint one or two other mainland Chinese banks and one European bank, said Kgadima, declining to give names.

The company has an anthracite coal mine in South Africa, producing 110 000 tonnes a month that will be expanded to a rate of 150 000 tonnes by the end of the year, he said.

Its finalising a long-term sales agreement with a Chinese state-owned company in the steel industry, he said, declining to give the companys name.
It has an agreement to deliver 40 000 tonnes per month of anthracite to a Chinese cement manufacturer in Ethiopia, according to a November 22 presentation on the companys website.