A damaged structure at the Astron Energy oil refinery in Cape Town, July 2 2020. Picture: DWAYNE SENIOR/BLOOMBERG
A damaged structure at the Astron Energy oil refinery in Cape Town, July 2 2020. Picture: DWAYNE SENIOR/BLOOMBERG

Two people died in an explosion and a fire at an oil refinery in Cape Town owned by a unit of Glencore.

The unit of Glencore confirmed that two people died in the blast  and seven others were injured, and two of them were still in  hospital. The incident occurred at 4am on Thursday, Astron Energy spokesperson Suzanne Pullinger said in an e-mailed statement.

All work has been stopped and the company will conduct an investigation, Astron CEO Jonathan Molapo said.

The head of safety and security in Cape Town had earlier told CapeTalk radio that three people died in the blast. Callers to the radio station described hearing a “massive explosion” that rattled windows and roofs.

An annual maintenance shutdown had been under way at the 100,000 barrel-a-day refinery, which was expected to restart in July, according to the SA Petroleum Industry Association.

The facility accounts for about 14% of SA's total fuel-refining capacity. Glencore’s local unit acquired 75% of Astron Energy in 2019. The refinery was previously owned by an SA unit of Chevron.

The plant has experienced challenges since the acquisition, including a pay dispute in March and a delay of the annual maintenance work after the nationwide lockdown started in March into control the spread of Covid-19.

Meanwhile, last week, Glencore, which is headed by SA-born billionaire Ivan Glasenberg, notified the market that the Swiss a-attorney-general’s office had opened a criminal investigation into the group “for failure to have the organisational measures in place to prevent alleged corruption in Democratic Republic of Congo”.

This comes as Glencore grapples with a tough macroeconomic environment, which has been worsened by the Covid-19 pandemic and global lockdowns. 

Glencore is already the subject of a probe by the US department of justice, which became publicly known in July 2018 when the group was subpoenaed to produce documents and other records relating to its activities in DRC, Venezuela and Nigeria and with respect to compliance with the Foreign Corrupt Practices Act and US money laundering statutes.

The  probe is ongoing, while others have since been launched into the group by the US Commodity Futures Trading Commission and UK’s Serious Fraud Office.

Switzerland has been supporting governance efforts in natural resources in recent years. A low tax jurisdiction, Switzerland has become the world’s largest commodity trading hub and is home to the headquarters of many major trading companies such as Glencore, Vitol and Trafigura

Glencore's share price fell the most in three months last week Monday following news of the investigation. Partly due to corporate governance concerns, Glencore's share prices has almost halved in value since mid-2018 and by some metrics trades at a discount to its peers that have iron ore in their portfolios while Glencore does not. 

However, on JP Morgan’s analysis, Glencore trades at a premium to most of its peers in terms of enterprise value to earnings before interest, taxes, depreciation, and amortisation (ebitda) ratio.

The stock was up 1.67% to close at R36.52. Since January the share price has lost 15.8%. With Lisa Steyn

Update: July 3 2020
This story has been amended to reflect analysis by JP Morgan. 

Bloomberg 

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