The fight between Norilsk Nickel and BCL liquidator Nigel Warren-Dixon has reached fever peach as the two exchange words through their lawyers regarding the failed purchase of Norilsk Nickel’s interests in the Nkomati mine in South Africa.
Norilsk Nickel's position is that the BCL Companies are in clear breach of the Nkomati sale contract and liable to compensate Norilsk Nickel for their failure to pay the purchase price of approximately US$300 million. Norilsk Nickel has also commenced a separate Reckless Trading claim against other parties, including the Government of Botswana, which is based on the BCL Companies' liability to Norilsk Nickel.
On the 2nd of October this year Norilsk Nickel lawyers Herbet Smith Freehills LLP wrote to Dixon’s lawyers Bookbinder Business Law (BBL)informing them that the South African proceedings they have taken are simply a drain on the resources of the BCL Companies, as the liquidator has failed to explain why he persists in pursing them.
Norilsk Nickel remains of the view that the Department of Mineral Resources was right to grant Section 11 consent and will be putting forward for that in the South African court proceedings and its submissions to the Minister of Mineral Resources and said that they are confident both the court and minister will agree with them.
The Russian based company said that it will be recognized that there is fundamental lack of good faith t the heart of the liquidator’s actions in South Africa. “BCL Companies were contractually obliged to help procure the grant of the section 11 consent and to provide all the information needed by the Department of Mineral Resources to make its decision. Indeed, the BCL Companies did in fact help prepare the application for the section 11 consent. However, now it no longer suits them, the BCL Companies are (through the Liquidator) arguing the Department of Mineral Resources should never have granted that consent,” argues Norilsk Nickel lawyers.
Section 11 reads thus, “A prospecting right or mining right or an interest in any such right, or a controlling interest in a company or close corporation, may not be ceded, transferred, let, sublet, assigned, alienated or otherwise disposed of without the written consent of the Minister, except in the case of change of controlling interest in listed companies.”
In strongly worded letter on the 10th of October, Dixon through his lawyers Bookbinder Business Law denied strongly that the South African proceedings are ‘’simply a drain on the resources of the BCL Companies as they cannot affect the BCL Companies’.
“Your clients submitted a defective section 11 application knowing full well that the BCL Companies did not possess the resources (technical and financial) to satisfy the requirements of the South African Mineral and Petroleum Resources Development Act, 2002,” Warren fired back.
In addition Bookbinder said that Norilsk Nickel’s attempt to rely on and enforce the Section 11 consent is duplicitous and will be seen as such by any South African court. The BCL liquidator argues that the Share Purchase Agreement (SPA) failed due to the failure by two parties to procure the consent of the third party as required by clause 3.1 (b) of the SPA. “On that basis alone the Nkomati SPA is void ab inito from no later than 1st September 2016,” reads the response.
“The fact that you have chosen to send a copy of your patently erroneous letter to the Government of Botswana speaks volumes as to your client’s lack of bona fides and its true intent; which is blatant attempt to extort a settlement of your clients’ ill-founded proceedings against government,” hit out Bookbinder on behalf of the liquidator.
Appearing before the Committee on Statutory Bodies and State Enterprise, Minerals Development Company Botswana Chief Executive Officer Toby Frears informed the committee that they have ring fenced the P521 million and is currently sitting at P560 million due to interest which was settlement money government had to pay Norilsk Nickel.
He said the money was transferred into their account after the BCL liquidator commenced a judicial review in the South African courts on behalf of BCL Companies in respect of the grant of section 11 consent. Frears informed the committee that the liquidator has told them that they have a very strong case.