OPINION

Back with a bang

Ready, steady, Remgro

After seemingly little corporate activity in the past decade, it would appear the sleeping giant Remgro has been awakened, with the investment holding company involved in a host of transactions over the past 12 to 18 months. The latest deal involving Remgro was announced on Monday when the group, founded by Anton Rupert in the 1940s, said it intended to unbundle its 25% interest in JSE-listed Grindrod to shareholders, in line with this strategy of moving most its portfolio to unlisted assets.

This follows other recent transactions involving other listed companies in which Remgro is invested, among them the proposed sale of Distell to Dutch brewer Heineken, as well as its recent offer together with shipping group MSC to take Mediclinic private.

But while there may have been little activity over the past decade from Remgro, this does not mean there has been nothing happening in the background.

Anyone who knows Remgro also understands that nothing occurs by mistake at the investment giant. Everything the group has achieved in its long life has been done through steady building and deliberate decision-making.

Interestingly, CEO Jannie Durand also confirms that while some of the transactions that Remgro has been involved in recent times appear to have all come to fruition at once, this is merely coincidental. Their origins often date back several years, but events such as the global pandemic acted as a dampener and delayed their rollouts.

This would indicate there is nothing impulsive about the transactions that Remgro has been involved in over the past couple of years. And most will be willing to give the group the benefit of the doubt when it comes to the ultimate outcome of its various transactions.

As one of the last and most successful investment holding companies still standing, you would be hard-pressed to find anyone who would bet against Remgro being around for the foreseeable future.

The market is also largely supportive of the company’s deals, with analysts saying they make sense and should unlock value for shareholders in Remgro over the longer term, especially with focus on offering investors access to assets they won’t be able to find on the JSE.

What is also particularly appealing is the active role Remgro is playing in plotting out the future of its investments. While there is always risk that accompanies these types of moves, it is preferable to adopting a passive approach, which always limits the potential of returns.

How much would 1 000MW of nuclear cost SA?

Dodgy fractions

A 2021 study published in the journal Science estimates that 2.5 billion Tyrannosauri reges roamed the earth for the roughly 2.4 million years that at least some them were putting their bipedalism to work. It's a big number, which puts into perspective the piles of coal.

SA's coal doesn't come from T. reges, of course, they lived in North America, among other reasons, but there is a lot of the stuff, and it remains Eskom's most necessary input, after political capital. It's also seemingly doing some heroic heavy lifting on the tax side of things, and a stocking with coal in it is actually a viable Christmas gift this year for the fiscal consolidation enthusiast in your life.

Still, it's on its way out, and renewables, and perhaps even nuclear, are the stuff for forward-looking politicians.

eThekwini - maybe - could be going in this direction. Its presentation on it energy generation plan for 2035 was big on atoms, with nuclear taking the biggest part of the split.

Lots of details on the metro's general plans were provided, but more are needed, and there is likely to be a lot of them if nuclear is involved. But at 31%, or 960MW, of its intended build, it's almost twice as big as coal's 500MW. Still only half a Koeberg, probably because eThekwini does have some anthracite at hand - suck it, Cape Town.

Certainly, this is all exciting enough to do a small amount of non-expert digging, at least on cost and timing, just to see if there's a quick way to confirm it's crazy.

eThekwini is planning to attract R324 billion in investment, implying R100 billion for nuclear generation, and judging by some recent construction, including in Czechia and Bangladesh, it's enough. Bangladesh looks set to get 2 400MW for about $12.5 billion (~R200 billion), although one should be careful just halving things.

Worth adding though is the potential cost overruns. A study by the economic research institute DIW Berlin says its financial modelling indicates the average loss on building a 1 000MW plant at about €5 billion (R87 billion), but one can't assume eThekwini will simply follow the trends.

More problematic is timing, as fuel supply needs to be considered, and Russia accounts for 40% of the global enrichment capacity for uranium. Prices for uranium were already high at the end of 2021 due to tightening supplies, and climbed by a further third in March 2022 to its highest levels since the Fukushima accident in 2011. While seemingly the nail in the coffin though, it's worth noting coal prices this year have also tripled and reached records this year, and maybe even a T. Rex would instead reach for the uranium.

Chart of the day

eThekwini's electronal ambitions

eThekwini's independent power producer's programme, source South African Institute of Electrical Engineers Youtube channel

Number of the day

The amount that global nuclear power generation increased in 2021, according to the International Energy Agency, reversing only half the decline experienced in 2020. Growth in 2021 pushes output from nuclear to 8% above 2019 levels, with emerging market and developing economies increasing their share to almost a third, from 29% in 2019.

Quote of the day

"At the end of the day its a matter of electrons. We want to ensure we have dispatchable electrons all the time so we can mitigate the impact of load shedding on the municipality."

Sbu Ntshalintshali, head of eThekwini's energy transition

Meme of the day

News24 encourages freedom of speech and the expression of diverse views. The views expressed in this column do not necessarily represent the views of News24.

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