Coal trains waiting to be emptied at Richards Bay Coal Terminal. | Leon Nicholas
Johannesburg - A court battle is on the horizon between the politically connected big coal miners in charge of Richards Bay Coal Terminal (RBCT) and Optimum Coal Mine (OCM) over export rights.
In court, Templar Capital will present a case explaining how it acquired the equity stake in OCM from the state-capture accused Gupta brothers, who defaulted on their debt to the company. OCM has brought in contractors to operate on mini-pits as part of the business rescue strategy to revive the once lucrative mine, but RBCT is suspicious of the OCM’s “job-saving” arrangement.
On the other side, RBCT would have to explain why it is comfortable to allow corruption-infested Glencore to use the international export terminal but is blocking OCM on the grounds that it is carrying reputational risk.
In a letter at the end of last month, Optimum Coal Terminal – the business in which the OCM export allocation is held – placed the ball squarely in RBCT’s court. OCT tabled a proposal that unless both parties reach an agreement, it would be prudent for RBCT to permit OCT to continue usage of the lucrative export terminal until the end of February, pending the outcome of any litigation.
The price of coal has shot up globally following the Russia/Ukraine conflict, and big mining companies in SA are salivating at the opportunity to drive profit margins in the international export markets.
The OCT proposal was in response to an earlier letter from RBCT on December 20, which dealt with the additional information that OCT had submitted to assist RBCT to reverse its decision to block the company from using the export terminal as of February 1.
RBCT, whose board includes executives from Glencore, Seriti Resources and Thungela Resources, had decided to cancel the valuable export allocation held by OCT on claims that the company carried reputational risk due to previous association with the infamous Gupta brothers who stand accused of capturing the South African state to enrich themselves.
However, Glencore, in which President Cyril Ramaphosa previously served as chairperson, has recently pleaded guilty to findings in US investigations regarding bribery and market manipulation and agreed to pay fines.
Ramaphosa was in partnership with Glencore while a director of Shanduka Group, a diversified industrial company with significant coal mining interests including a stake in OCM – later sold to Gupta-owned Tegeta Resources in 2016. The CEO of Seriti, Mike Teke, donated R600 000 to Ramaphosa’s ANC presidential campaign in 2017, dubbed #CR17. Bernard Dalton, the executive head of marketing at Thungela, previously Anglo Coal, is also on the board of RBCT.
The National Prosecuting Authority pulled the first trigger on OCM in March last year and secured a preservation order under the pretext that the mine was acquired through proceeds of crime – even though Templar acquired ownership of the mine by converting the Guptas’ debt to equity.
RBCT CEO Allan Waller stated in the December 20 letter that given the additional information that OCT had provided, the RBCT board would consider it and provide feedback by January 20 on whether the earlier deadline to block OCT from using the facility still stands. On November 30 last year, RBCT had given OCT until January 31 to cease exporting coal through the terminal.
“In the circumstances, RBCT is not currently in a position to consider agreeing to any further extensions to OCT beyond 31 January 2023, which (was the) extended date you had proposed in October 2022 and confirms that its position set out in its letter to you of, November 30, 2022, stands. We understand that OCT must consider taking whatever lawful steps it deems appropriate and are open to it in the circumstances,” Waller said.
The withdrawal of OCT’s access to the coal terminal would place at risk the jobs of up to 2 000 workers employed by the group of contractors currently conducting limited operations on “mini-pits” as part of the business rescue plan.
The OCT business rescue practitioners, Kurt Knoop and Kgashane Monyela, said in a response to RBCT, dated December 26, that “in the event that RBCT’s position remains unchanged from the one set out in your letter of November 30, 2022, notwithstanding its consideration of the information and submissions made by us subsequent thereto, it will leave the parties with a mere seven working days to finalise an urgent court application that will by necessity have to deal with substantial and possibly complex issues of fact and law”.
“This includes having to finalise the drafting of the application after considering RBCT’s communication of January 20, 2023, serving the application, providing RBCT time to answer thereto, replying to the answering affidavit, dealing with intervention applications that will no doubt be brought, preparing for an argument, allowing the court time to hear the application, consider it and write a judgment on it, all within the space of less than two weeks.”
Knoop and Monyela said that “it will not only be impractical to attempt the above in the time frame imposed by RBCT but may also cause severe prejudice to all parties involved, as well as the court, to attempt to do so”.
“Conversely, should the parties agree to truncated but practical time frames within which to achieve the finalisation of an urgent application, it will not cause any prejudice to any of the parties,” they continued.
OCT intended to launch its urgent application by January 25, then receive answering affidavits from RBCT by February 3 and provide replies five days later. It was expected that the court application would be heard on February 13.
“We submit that the above proposal not only provides for a practical way to deal with the possible urgent legal proceedings that may follow the January 20, 2023 communication but will also curtail the substantial prejudice that will be suffered by the parties and the court if the very unpractical alternative set out above is imposed,” OCT said.
OCT had given RBCT a deadline of Friday to confirm the proposed schedule, however there was no response at the time of going to print.