Johannesburg - Big coal mining players with ties to President Cyril Ramaphosa stand to boost their profits in the wake of the Richards Bay Coal Terminal’s decision to block Optimum Coal Mine (OCM) from accessing international export markets based on flimsy claims that the company has Gupta fingerprints.
The National Prosecuting Authority (NPA) pulled the first trigger on OCM in March and secured a preservation order under the pretext that the mine was acquired through proceeds of crime - even though Templar Capital Limited, the new owner, acquired the equity stake after the Guptas defaulted on their debt to the company.
The NPA’s move, however, set the stage for RBCT, which harbours on its board the corruption-infested Glencore, Seriti Resources and Thungela Resources Limited, to cancel the valuable export allocation held by OCM on claims that the company carried a reputation risk.
The RBCT gave Optimum Coal Terminal (OCT) – the business in which the export allocation is held - until 31 January next year to cease exporting coal through the terminal, placing 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 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 margin in the international export markets. 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 Tenet Resources in 2016.
Glencore has recently pleaded guilty to findings in US investigations regarding bribery and market manipulation and agreed to pay fines.
The chief executive of Seriti, Mike Teke, donated R600000 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.
Striking Optimum workers on Wednesday waved placards with Teke and Dalton’s names, calling on the board of RBCT to “stop promoting greed at the expense of the poor”. On Wednesday, the National Union of Mineworkers’ (NUM) branch secretary in Optimum Richard Mguzulu warned: “What is happening here is that if this allocation is taken out of Optimum, it is going to be given to Seriti, Thungela and Glencore, who are the big mining houses. That will mean they will have lots of coal that they will export”.
Mguzulu continued: “The reason for that is because the coal price is so high, and they know if they export more coal, then there will be lots of money that will come to them. We are saying as the community and the employees, they are greedy these people. They are heartless. They are not thinking about the people that are starving on a daily basis, having nothing to eat. These mini-pits were meant so that by the time the mines open, at least people are working”.
OCM general manager Howard Pyoos said on Wednesday the decision by RBCT will be challenged. In comparison to OCM, he said, “Glencore has recently pleaded guilty to bribery charges in what has been described as a landmark case for the Serious Fraud Office in the UK, as it was the first conviction of a company on charges of authorising bribery”.
“Glencore also pleaded guilty on two charges of the related offence of failing to prevent bribery...RBCT is silent on what unwanted local and global attention it has received regarding these proven allegations against Glencore and its use of its RBCT entitlement”.
Payoos said that in 2018 after OCM was placed into business rescue and subsequently under care and maintenance, the company sought third-party contractors to mine the site for a fixed royalty per ton of coal.
He said that in the period between December 2018 and January this year, OCT did not utilise its RBCT entitlement, which was “predominantly utilised by Glencore and Thungela, with a small portion utilised by Exxaro”.
He said that neither OCT nor OCM made no profit from Glencore, Thungela or Exxaro utilising its entitlement. Instead, OCT accrued liabilities of R95 million during that period.
“RBCT allowed this position to become the status quo for three years, to the significant benefit of its shareholders who were utilising OCT’s RBCT entitlement, and to the detriment of OCT/OCM, without issue,” he said.
He said that the Templar’s Liberty Coal subsequently tabled a proposal to ensure that the mine could operate again, contained in the adopted business rescue plans of OCM and OCT. This happened just before the National Director of Public Prosecutions Shamila Batohi “obtained a preservation order and is now seeking to have the Optimum mine and terminal forfeited to the state,” he said.
Payoos said: “If forfeited to the state, there is no plan on how the mine will be rehabilitated or how jobs will be saved”.
In a letter to the NUM, dated last Thursday, the RBCT said it conducted an assessment during October/November 2022 of OCM, the “mini-pit contractors” appointed by OCM and the “mini-pit operations” referred to in the OCM and OCT Business Rescue Plans. This followed NPA head Shamila Batohi’s successful asset preservation applications to place under curatorship, and preserve, assets comprising the R1.3bn claim of Templar against OCM.
RBCT CEO Alan Waller said certain information was requested to allay RBCT’s concerns arising from Batohi’s allegations. Waller said there was also an agreement that the revenues from the sale and export of coal using OCT’s export entitlement should accrue to OCM to be used by OCM to fix OCM and bring OCM back into full production. RBCT was worried that the money was currently accruing to third-party contractors “mainly unknown as information as to their ownership was withheld from RBCT”.
He said RBCT “faces significant risk if the current or future use of OCT’s Entitlement by OCM/Liberty Coal and others is subsequently found to be a part of a current grander scheme to (continue to) launder money and/or to strip money out of South Africa by known/unknown third parties…”.
On Wednesday OCM named all the contractors involved in operations at the mine as Bothashoek Pit, Mashwayi, Masemanzi Mining, Bidvest Security, Tau Tona, EIC, Close-up Mining, Pioneer Drill & Blast, Tokata Mining, Salaria, Berbarry Holdings, Isithinzi Mining, Isabis Mining and Titanium Security. Altogether these contractors currently employed 2 120 workers, up from 512 in 2020 and 1 180 in 2021.
Payoos said the assessment by RBCT was suddenly done more than a year since the operational model was put in place. He said during the assessment, RBCT “explained a rather bizarre position that they needed the names and ID numbers of the 2000+ employees to make sure that there wasn’t just one accountant who sat there and that the employees and volumes of coal being mined were real”.
He said the coal price went up due to the Ukraine-Russia conflict and the RBCT and the curator, therefore, expected OCM/OCT should be making more money.