Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Project Halo, the South African consortium selected as the preferred bidder in the highly contested acquisition of coal mines previously owned by the Gupta family, is denying circulating allegations of favouritism for allegedly being linked to the same family.
The group, which last year bought three major assets from Tegeta Exploration and Resources (Pty) Ltd., a Gupta family-linked mining company, said Tuesday that Optimum Coal Mine, Koornfontein Mine and Optimum Coal Terminal had not been operating at full functionality. This, as the mines’ owner was put on business rescue after the main buyer of those operations’ output, state-owned power utility Eskom, refused to renegotiate what it said was an unprofitable coal-supply contract and issued penalties.
The South African consortium has distanced itself from allegations that it is linked to the Gupta family, the previous owner of Optimum coal and other two assets.
But Swiss company Charles King SA argued it was seeking to stop business rescue practitioners from selling the three assets while they were awarded to Project Halo. Charles King has noted the Gupta’s holding company had agreed in 2017 to sell it Optimum for 2.97 billion rand ($201 million), though the transaction wasn’t completed.
Eskom is currently at the centre of an official investigation into claims that members of the Gupta family used their friendship with former President Jacob Zuma and his son Duduzane to secure business contracts.
Paul Buckley, director of Project Halo, said there was nothing shady in the way it secured the bid to acquire the mine and other related assets.
“Let it be stated clearly that we won the bid fair and square, based on our sound business proposal which was assessed by the business rescue practitioners as the best plan presented to them,” Buckley said in a statement.
He noted that Project Halo declared its expression of interest in the Optimum mine in March 2018, putting down a deposit of R250 million, as per business rescue practitioners procedure, towards the end of 2018.
“We are focused on going through the final stage of the process with the creditors and then immediately hit the ground running, paying particular attention to the workers,” Buckley said.
“Our sympathies lie with the workers at the mines, who have not been paid for some time. As soon as we take over the mine, and production resumes, we hope to address the workers’ plight.”
Over 2,000 workers at the Optimum and Koornfontein Collieries have not been paid their salaries for the past three months, laying the blame on the business rescue practitioners overseeing the operations.
