This article has a lot of interesting “flavors of SA” in it.
The overview: a big steelmaker (ArcelorMittal) owned partial mining rights to an iron ore pit. The iron ore miner (Kumba) got those rights in exchange for a promise to sell ore to the Mittal at cost +3%, which is a big discount to the market rate.
Those rights lapsed, and it sounds like someone at Mittal just forgot to re-file. Not sure what happened, but it was a monster mistake. Kumba applied to get the rights for itself. Mittal applied to get the rights again (because it wants the cost+ deal again). A no-name company called ICT, which seems to basically be a shell company with some cash, filed for the rights.
It just so happens that ICT is owned in large part by the son of President Zuma and by a family with close ties to Zuma.
ICT was awarded the rights, and Mittal immediately offered to buy the company for >$100m (with the goal of re-negotiating the contract that previously existed). That’s a very tidy profit for a group of people that, as far as I’m aware, didn’t actually do anything except hire lawyers and apply for a permit.
Oh, and why did ICT get awarded the rights over Kumba? “The [mining/minerals] department judged ICT to have greater black economic empowerment credentials and awarded it a prospecting right, prompting Kumba to cry foul and approach the court last year to set aside the decision.”
And, by the way, the minerals dept will likely force Kumba into the same cost +3% deal with ICT that Kumba had with Mittal. Justification? Kumba played dirty by not reminding Mittal to re-apply: “‘In light of the duty of good faith which Sishen Iron Ore owed ArcelorMittal in terms of the supply agreement, Sishen Iron Ore’s conduct as afore described falls short of the minimum standards of ordinary business ethics which, I submit, apply even in the cutthroat environment of the South African mining industry,’ Mr Nogxina’s affidavit reads.” If Kumba played dirty, wouldn’t it make more sense to… simply give Mittal the rights back? After all, Kumba didn’t do anything to harm ICT.
Oh, and let’s not forget: at the same time ArcelorMittal bought ICT back in August, Mittal made a deal to help its BEE score. “In a separate statement, ArcelorMittal South Africa said it had finalised its black economic empowerment deals with an aggregate value of R9.075bn, transferring 26 percent of its shares to a group of black investors -- including an investment group led by the son of South African President Jacob Zuma -- and employees.” Right… I’m sure that’s completely separate from the deal to buy ICT from Zuma Jr. & Co.
As a disclaimer, I don't know any more than what a few newspaper articles and conversations have told me. However, there are a lot of signs that things are fishy, even if technically legal.
The overview: a big steelmaker (ArcelorMittal) owned partial mining rights to an iron ore pit. The iron ore miner (Kumba) got those rights in exchange for a promise to sell ore to the Mittal at cost +3%, which is a big discount to the market rate.
Those rights lapsed, and it sounds like someone at Mittal just forgot to re-file. Not sure what happened, but it was a monster mistake. Kumba applied to get the rights for itself. Mittal applied to get the rights again (because it wants the cost+ deal again). A no-name company called ICT, which seems to basically be a shell company with some cash, filed for the rights.
It just so happens that ICT is owned in large part by the son of President Zuma and by a family with close ties to Zuma.
ICT was awarded the rights, and Mittal immediately offered to buy the company for >$100m (with the goal of re-negotiating the contract that previously existed). That’s a very tidy profit for a group of people that, as far as I’m aware, didn’t actually do anything except hire lawyers and apply for a permit.
Oh, and why did ICT get awarded the rights over Kumba? “The [mining/minerals] department judged ICT to have greater black economic empowerment credentials and awarded it a prospecting right, prompting Kumba to cry foul and approach the court last year to set aside the decision.”
And, by the way, the minerals dept will likely force Kumba into the same cost +3% deal with ICT that Kumba had with Mittal. Justification? Kumba played dirty by not reminding Mittal to re-apply: “‘In light of the duty of good faith which Sishen Iron Ore owed ArcelorMittal in terms of the supply agreement, Sishen Iron Ore’s conduct as afore described falls short of the minimum standards of ordinary business ethics which, I submit, apply even in the cutthroat environment of the South African mining industry,’ Mr Nogxina’s affidavit reads.” If Kumba played dirty, wouldn’t it make more sense to… simply give Mittal the rights back? After all, Kumba didn’t do anything to harm ICT.
Oh, and let’s not forget: at the same time ArcelorMittal bought ICT back in August, Mittal made a deal to help its BEE score. “In a separate statement, ArcelorMittal South Africa said it had finalised its black economic empowerment deals with an aggregate value of R9.075bn, transferring 26 percent of its shares to a group of black investors -- including an investment group led by the son of South African President Jacob Zuma -- and employees.” Right… I’m sure that’s completely separate from the deal to buy ICT from Zuma Jr. & Co.
As a disclaimer, I don't know any more than what a few newspaper articles and conversations have told me. However, there are a lot of signs that things are fishy, even if technically legal.
No comments:
Post a Comment