[miningmx.com] — KUMBA Iron Ore has come to the defence of chairman Lazarus Zim, who was linked by the Mail & Guardian newspaper to the empowerment group that snatched the 21.4% right in Sishen iron ore mine from under the nose of the Anglo American subsidiary.
Zim is a director and shareholder of Sahara Computers, which is owned by the Gupta brothers, who are reportedly very close to Jacob Zuma, the president of the country and the ruling party, and his family, the newspaper reported.
The Gupta’s Oakbay Trust is a sizeable shareholder in Zim’s Afripalm Resources, which controls Mvelaphanda Resources (Mvela).
Jagdish Parekh, who is an executive of Gupta companies, heads a firm called JIC Mining, which holds half of Imperial Crown Trading 289 (ICT), the firm that was awarded the 21.4% stake in Sishen iron ore mine.
“It is through Parekh and the Gupta’s that Zim’s “potential conflict’ arises,’ reported the Mail & Guardian, South Africa’s leading investigative newspaper.
The awarding of the stake in Sishen is mired in controversy. ArcelorMittal South Africa held the 21.4% right but did not renew it by end-April 2009 as required by mining laws. These rights reverted back to the state.
Just four days later, Kumba, which owns the rest of Sishen in a venture with Exxaro Resources, submitted a mining right application over the 21.4% stake. On the very same day, ICT put in a prospecting right application. According to legislation, ICT was favoured because preference must be given to “historically disadvantaged persons’.
Very little is known about ICT, but it has listed as its executives some politically connected individuals.
The documents of both applications are said to bear remarkable similarities, prompting questions about why that would be the case, with suggestions ranging from a leak within the DMR’s regional office handling the applications to leaks within Kumba or the firms appointed to handle the process.
Kumba has appealed against the awarding of rights to ICT. The Department of Mineral Resources, which has said it is reviewing the matter. So far, it is understood, the DMR has not contacted Kumba regarding the appeal.
Kumba has stood by Zim, saying there is no conflict of interest.
“The executive and non-executive directors of Kumba have agreed that there is no conflict of interest as Mr Zim is not involved in any way in ICT, and that Lazarus Zim has significant experience and wisdom to add to the deliberations,’ said a Kumba spokesperson.
“Because of his association with shareholders of ICT, Zim has, on three occasions, offered to recuse himself from discussions in the Kumba board meetings about ICT. The Kumba board did not believe that this was necessary.
Zim is also chairman of Mvela, which has as its primary asset a 63% stake in Northam Platinum, which has one operating mine and is building a mine on one of South Africa’s premier platinum prospects.
Zim’s Afripalm bought into Mvela at the beginning of 2007 at a price of R29,20/share, paying R1,2bn for 40m shares – equivalent to a 19,3% stake in the company. The shares are now trading at R44 each.
Mvela plans to unbundle by the end of this year because of JSE rules forbidding pyramid structures. Mvela has stakes in a number of companies but does not operate any of them. The unbundling process is being delayed by an ongoing arbitration process with former shareholder Khumama Resources.
The unbundling would place Northam and Gold Fields shares, a stake in diamond miner Transhex and a number of platinum exposures into the hands of Mvela shareholders.
The arbitration hearing set down for two weeks in May have not reached any resolution and further hearings are scheduled for July. The JSE has set a deadline for December this year for Mvela to resolve the pyramid structure.
There have been reports that Zim is under financial pressure to a number of backers including banks. Zim has denied this is the case.
