Optimum Coal Mine’s new curator will have their work cut out as a battle rages for control of the Gupta-linked business.
Peter Van Den Steen, who resigned last month after death threats, filed his fifth report at the Pretoria high court last week amid litigation to forfeit the mine to the state; criticism by Liberty Coal, which plans to buy the mine; Richards Bay Coal Terminal’s withdrawal of the company’s export allocation; and tensions with business rescue practitioners regarding mini-pit contractors operating at the mine.
Van Den Steen said in his report, where he applied for a discharge from his appointment as curator, that he had received two death threats against himself and his family. They were made after his fourth report on December 8 revealed the potential profits from mini-pit operations by parties other than Optimum and his intention to consider withdrawing his consent therefor.
In the fifth report he said mini-pit contracts concluded with Optimum were not in alignment with industry norms and the arrangement was “manifestly favourable” to the contractors.
“Certain of the mini-pit contracts contain provisions in terms of which the mini-pit contracts would terminate when it becomes uneconomical to continue mining; for instance, in the event of a downturn in coal prices.
“Optimum business rescue practitioners remain silent about the absence of provisions that would provide for increased royalties being payable to Optimum Coal Mine in the event of an increase in coal prices,” said Van Den Steen.
Coal prices have surged since Russia invaded Ukraine in February last year.
In the fifth report, Van Den Steen said while companies are required to update their mineral resource data, Optimum relied on an outdated mine plan.
“Optimum appears to be relying on the 2016 competent persons report which in turn relies on a 2015 resource statement by Glencore,” Van Den Steen wrote, referring to the independent geological technical documents for informing investors.
“The accuracy of the Optimum resource statements may therefore not be entirely reliable.”
Van Den Steen was appointed curator to oversee Optimum’s business rescue practitioners last year after the National Prosecuting Authority (NPA) was awarded a preservation order that prevented the implementation of a rescue plan that would have allowed Liberty Coal to buy Optimum.
The NPA is involved in legal proceedings to have the assets forfeited to the state.
In his fourth report, Van Den Steen said had Optimum mined and sold its coal, it could have potentially generated R6.3bn from March to September 2022. That would have been enough to pay its creditors in full and exit business rescue within months.
The mine, which has been in the form of bankruptcy protection since 2018, entered into contracts with mini- pit contractors because it said it did not have the capital required to mine the coal.
Van Den Steen said he is not on record as suggesting the business rescue practitioners are unilaterally entitled to change the terms of the mini-pit mining contracts.
However, Bouwer van Niekerk, a lawyer for the business rescue practitioners, referred Business Times to a letter to affected parties filed on Wednesday.
The practitioners say in the letter that they are unaware of mechanism with which to amend or cancel legal agreements with mini-pit contractors.
“We find it necessary to point out that the suggestion by the curator that he could somehow resolve the self-created ‘injustice’ at Optimum by withdrawing his consent for mining operations to continue is not only based on a novel hypothesis in law, but is also short-sighted,” the letter reads.
“We say this due to the fact that should his threatened withdrawal have led to the mining operations becoming illegal in nature, he did not suggest or ostensibly even apply his mind to how Optimum would have defended possible significant damages that would no doubt be instituted against it.”
The joint business rescue practitioners also say Van Den Steen failed to mention that they had invited him to explore a possible alternative business model to ensure job losses were avoided and mining activities continued, while dealing with litigation over novel questions of law.
The mini-pit operations are not the only challenge facing the Optimum curator.
Liberty Coal, the purchaser of Optimum, penned an open letter to President Cyril Ramaphosa asking for assistance in its acquisition of the mine. It blamed “the unscrupulous tactics” of the NPA and Richards Bay Coal Terminal for the “false narrative still to be tested by the courts that can only result in further unemployment”.
NPA spokesperson Sindisiwe Seboka said: “Liberty Coal is controlled by Daniel McGowan, who was a close associate of the Gupta family at the time of their state capture activities.”
Seboka said Liberty Coal and McGowan weren’t innocent victims.
“His [Liberty Coal’s] open letter should be seen for what it is — a desperate attempt to escape accountability for his state capture-linked money-laundering crimes so he can continue to profit from the proceeds of state capture,” she said.
The mine employed 4,293 mineworkers, Seboka added. “Those mineworkers lost their jobs because when Optimum was exposed as a Gupta family money-laundering instrument, the banks refused to do business with Optimum and it could not continue to operate,” she said.
“McGowan was a central player in the money-laundering that caused the closure of Optimum.”
Liberty Coal denied allegations McGowan was a Gupta associate. “Despite McGowan consistently refuting any knowledge of the Guptas’ unlawful schemes when they were in control of Optimum, it is the narrative the NPA is pushing,” Liberty Coal said.
The Richards Bay Coal Terminal did not respond to a request for comment.
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