Business rescue may put Optimum back under Glencore ownership
Cape Town - The prospects of Glencore potentially returning as the owner of Optimum mine opened up suddenly when the mine’s business rescue practitioners told Parliament there is a “distinct possibility” that Gupta-owned mining assets could eventually be bought up by other investors.
However, such a transaction would be subject to strict regulation compliance, the Department of Mineral Resources told Parliament on Wednesday. Companies affected include assets of the Gupta-owned Tegeta mining group, such as the Optimum coal mine which supplies to Eskom.
A total of 1 470 employees were affected at Optimum and Idwala’s Koornfontein operations as a result of the events leading to the business rescue process. Other companies affected in the Gupta mining group are Shiva Uranium mine, Vryheid Revival Mines and Brakfontein mine.
Glencore previously owned the mine, but compelling evidence has emerged that Eskom and Tegeta together conspired to strongarm Glencore into relinquishing the mine for Tegeta to scoop up. Since the Guptas have been pursued by authorities, their business operations in South Africa have faced operational and legal woes.
Louis Klopper, business rescue practitioner for the eight Tegeta-linked companies of the group under business rescue, told Parliament’s portfolio committee on Wednesday that since the Bank of Baroda’s exit from South Africa, he and his colleagues have been preoccupied with getting the mines financed by transactional banks to ensure they can continue paying employees.
The companies running the various mine operations went into business rescue after the Bank of Baroda’s exit left them straining to pay employees and service providers. Klopper said once this is fixed by the end of March, the businesses could continue operating and may very well be acquired as a going concern.
However, the Department of Mineral Resources stressed affected parties would have to adhere to strict conditions in terms of the Mineral and Petroleum Resources Development Act before assets could be sold.
“In terms of section 11, a right, an interest in a right or a controlling interest in a company may not be ceded without ministerial consent, except in a case of commercial transaction between parties through the Competition Commission,” said the submission.
Provisions for the rehabilitation of the assets include R1.6bn for Optimum coal mine, R9m for Brakfontein (with a shortfall of R11.8m), R306m for Koornfontein and R8.6m for Idwala (with a shortfall of R6.1m).
The department said there were no records of any section 11 applications received from the company to another entity before appearing in Parliament. It received a notification from Nedbank in February indicating an intention to withdraw guarantees, to which the department responded by asking that the bank transfer funds to the department’s bank account.
Klopper told the committee that the sheer number of companies under the large group of mining operations made it difficult to hold board, staff and creditor meetings within 10 days, in line with business rescue requirements.