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Mantashe won’t save you, Norilsk tells BCL

BCL Mine stopped rumbling in October 2016
Russian metals giant, Norilsk Nickel says even if BCL secures a positive review from South Africa’s minerals minister, Gwede Mantashe, in its fight to avoid a multimillion dollar claim, the battle will go on.

Mantashe recently asked the two sides to shelve their ongoing court battle over the US$271 million deal and wait for his decision.

The October 2014 agreement involved BCL purchasing Norilsk’s assets, which included a 50% stake in Mpumalanga mine, Nkomati Nickel, as well as Tati Nickel Mine near Francistown. Payment would be made once several regulatory conditions were concluded, the last of which was the transfer of Nkomati mining rights to BCL, by South African mining authorities.

Norilsk Nickel has since filed several suits against BCL demanding payment.

Nigel Dixon-Warren, BCL Mine’s liquidator, has laid a case in Johannesburg arguing that the 2014 contract is null and void, as the last condition for it to come into effect, should not have been effected.

Effectively, the SA Mines minister incorrectly approved the transfer of mining rights as BCL had not demonstrated the necessary financial capacity to take up the rights. The approval from the Minister for the transfer of mining rights is known as Section 11 consent.

Last week, Dixon-Warren told BusinessWeek it was expected Mantashe would see that conditions for granting the approval were invalid.

This week, it emerged that while Norilsk Nickel had accepted Mantashe’s intervention in the matter, the Russian giant said an adverse ruling against its interests would not be the end of the matter.

“The South African constitution reserves to courts the exclusive power to decide questions of legality concerning administrative acts,” lawyers representing Norilsk wrote in a letter to Dixon-Warren.“It is therefore settled law in South Africa that the Minister in the appeal does not have the ability to declare the Section 11 consent unlawful, or to set it aside with retrospective effect.

“In short, even if the liquidator is successful in the appeal, the conditionality of the sale deal would be unaffected. That should be the end of the matter.” Norilsk’s lawyers said even the High Court would not be able to relieve the liquidator and BCL.

“Even if the court was satisfied that the decision to grant the Section 11 consent was unlawful, the court would in all likelihood exercise

its remedial discretion to ensure that the BCL companies cannot benefit from their own breaches of contract and to protect our clients’ interests.” One of these breaches, Norilsk lawyers said, is that BCL was obliged under the Nkomati sale deal to help secure the Section 11 consent and thus, the liquidator was acting in breach of the agreement “by seeking to undermine that consent through proceedings”.

The Russian group, in a separate brief, said it would however submit its case to the Minister’s attention.“Norilsk Nickel remains of the view that the Department of Minerals Resources was right to grant the Section 11 consent and will be putting forward its reasons in the South African court proceedings and in its submissions to the Minister,” lawyers representing the nickel giant wrote last week.

“Norilsk Nickel is confident that the court and minister will agree.”Last week, Dixon-Warren told BusinessWeek it was hoped Mantashe would give a response before the end of the year.

“The minister has said he wants to study the appeal, which is good news for us because the appeal is what we are seeking in our case.

“We expect the minister to see that the conditions for granting that approval were invalid,” Dixon-Warren said.

A P522 million settlement from government to Norilsk Nickel was stopped earlier this year after Dixon-Warren pointed out that his cases in South Africa were essentially arguing that BCL had no financial liability to Norilsk Nickel.

Norilsk’s most recent letters and notes, which also accused the liquidator of wasting government’s money and time in endless and futile lawsuits, are suspected to have also been circulated to senior government officials in a campaign against Dixon-Warren.

The liquidator has faced mounting pressure from Cabinet and parliamentarians to rein back on expenses associated with BCL. On Friday, Minerals minister, Eric Molale said a team was being appointed to work with Dixon-Warren and bring BCL’s liquidation to a decision point next June.Government is the sole shareholder of BCL Mine.





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