Wesbank

Govt duped in P450m BCL deal

SHARE   |   Thursday, 04 October 2018   |   By Phillimon Mmeso
BCL workers BCL workers

Skeletons are beginning to tumble out in the liquated state owned company BCL Mine and the Russian mining company Norilsk Nickel over the sale of Nkomati Mine in South Africa. Under a barrage of questions from Public Accounts Committe members MPs Dithapelo Keorapetse and Samson Moyo Guma, Permanent Secretary in the Ministry of Mineral Resources, Green Technology and Energy Security Cornelius DeKop succumbed to pressure and confirmed that Parliament was misled.

DeKop admitted that they should not have requested the P450 million from Parliament to pay Norilsk Nickel Group an out of court settlement for the failed acquisition of Nkomati Mine in South Africa. He said at the time due diligence was not done as the case is still before the courts in South Africa. Keorapetse put it to DeKop that Norilsk Nickel were part of the board members of BCL Mine and therefore negotiated with themselves, to which the PS nodded in admission before conceding that such arrangement was wrong.

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In April 2017 the Ministry of Finance and Economic Development requested a supplementary budget of P450 million to pay Russian company, Norilsk Nickel Group  an out of court settlement. Initially the proposal was rejected by the Parliamentary Committee on Finance and Estimates after it raised a red flag over a Presidential Directive instructing government to pay Norilsk Nickel Group P430 million in an out of court settlement. The money was deposited into the account of state owned Minerals Development Company Botswana (MDCB) waiting to be transferred into the Norilsk Nickel accounts.

As part of portfolio diversification, BCL came up with POLARIS II and part of the strategy entailed buying a 50% stake in South Africa’s Nkomati Mine operated as a joint venture between Patrice Motsepe’s African Rainbow Minerals (ARM) and Norilsk Nickel. This acquisition would allow BCL to secure a high quality feed to the BCL smelter. The BCL smelter is regarded as one of the biggest of its type in the world. The 2014 transaction also saw the handing over of Norilsk’s Tati Nickel Mining Company (TNMC) to BCL and the exit of Norilsk from its minority stake in BCL.

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The Nkomati deal

In 2014, BCL agreed to buy 50 percent of the Nkomati nickel mine and 85 percent of Tati Nickel Mining Company located in Botswana, from Nornickel, which is among the world’s biggest producers of the metal, for $337 million. BCL was supposed to raise $250 million in a bond sale to help fund the purchases.

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 The transaction with Norilsk was structured as a share Sale and Purchase Agreement (SPA) and signed on October 17, 2014 and subject to the fulfillment of certain conditions such as regulatory approval in South Africa. It emerged during the PAC hearing on Wednesday that the South African Minister of Mineral Resources Mosebenzi Zwane approved the deal without the approval of South African Director of Mines.

BCL Enterprises is said to have not met some of the conditions as the company was not financially stable even though they had restructured their balance sheet with accumulated loans that government had provided swapped for more equity.    



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