The deal will see Glencore take 75pc ownership of Chevron’s refineries, pipelines and petrol stations in the two southern African countries; the combined business made $138m in pre-tax profits last year.

The remainder of the business will continue to be held by its current owner, Off The Shelf Investments Fifty Six, a group that was encouraged to buy up assets under South Africa’s economic empowerment rules designed to support historically impoverished communities.

Glencore’s investment is a vote of confidence in South Africa at a time when many foreign investors are wary of political turmoil in the ruling ANC party. The FTSE 100 group already has extensive holdings in the country, and said that the Chevron assets would “provide an attractive downstream opportunity for its oil business”.

Switzerland-based Glencore has benefited from rising commodity prices in the last year, boosting its profits and allowing it to engage in a series of “opportunistic” deals. Earlier this week it spent around $530m shoring up its holding in Peruvian miner Volcan, while in the summer it acquired a $1.1bn stake in coal mines in Australia formerly owned by Rio Tinto.

The Chevron deal will be funded from Glencore’s cash reserves. The company said the net outlay would be less than $500m once it receives proceeds from the $775m sale of its oil products storage business, announced in March.

Chief executive and major shareholder Ivan Glasenberg is keen to prove to the market that despite its spending spree Glencore is operating under a “conservative financial framework”, having been forced to raise funds from shareholders in 2015 during the depths of a commodities downturn.

The miner, which is also one of the world’s largest traders of oil, will keep the existing management in place. It is understood it could seek a partner to take on a share of the business down the line.

—————————-

TankTerminals.com – Research, Market and Expand Your Presence within the Tank Storage Industry Learn more.