[miningmx.com] — STATE-OWNED lender Industrial Development
Corporation (IDC) has said it was working hard at bringing the feud between Kalahari
Resources and global steel giant ArcelorMittal to an end.
Kalahari, headed by businesswoman Daphne Mashile-Nkosi, and Luxembourg-based
ArcelorMittal have been at each other’s throats over the funding of the R11.2bn
Kalagadi manganese project, of which ArcelorMittal is the biggest shareholder.
The dispute resulted in Kalahari approaching the South Gauteng High Court to force its
partner to pay R241.3m towards the project to honour its obligations under a
shareholders agreement.
Speaking to City Press last week after the IDC’s results were announced,
chief executive Geoffrey Qhena said that while the lender was the smaller shareholder
in the manganese venture (which owns 10% of the project), it was playing a
mediatory role behind the scenes to resolve the impasse.
“We might not be vocal about the matter, but we are engaging with both parties to
ensure that a solution is reached. We want to see a solution being reached soon,’
Qhena said.
Kalahari has invested more than R1.3bn in the venture, ArcelorMittal has pumped in
more than $430m and the IDC invested R100m.
The IDC has set aside a further R2bn to lend to aspiring manganese producer
Kalagadi. The project is expected to create 3,200 jobs.
It involves the construction of a manganese mine and sinter plant near Hotazel in
Northern Cape, as well as a ferromanganese smelter in the Coega Industrial
Development Zone, near Port Elizabeth.
The squabble between Kalahari and ArcelorMittal has raised fears that the project may
completely derail in the near future.
But Qhena was optimistic that “the project will be delayed, but it won’t be cancelled’.
Last week, the High Court granted ArcelorMittal, which owns 50% of the project, leave
to appeal the decision to pay the R241m to Kalagadi. It has, however, complied with
the judgment and paid the money.
On the other hand, Kalahari has pledged its 40% shareholding in Kalagadi as security,
and in the event ArcelorMittal won in the appeal process, it could lose its shares if it’s
unable to repay the money to the steel company. Besides the R241m, the steel
producer and Kalahari are clashing over corporate governance issues at Kalagadi.
City Press understands that one of the concerns raised by ArcelorMittal was
Mashile-Nkosi’s insistence on holding the positions of chief executive and chairperson
of Kalagadi. This is forbidden by the King III report, South Africa’s bible on corporate
governance.
Said Qhena, “The company needs to comply with the King recommendations. We can’t
have a one-man show. It’s important to clarify roles and get the right CEO because we
are dealing with billions here.’
He added that during the early stages of the project, it was not a problem having one
person doubling up as chairperson and chief executive, but the project had become
too big for one person to handle both roles.
Meanwhile, the IDC recorded a 22% jump in its profit, up to R3.3bn this year from
R2.7bn last year.
For his performance, Qhena, as chief executive, was rewarded with a 22% increase in
his pay to R10.7m this year from R8.8 million last year.
– City Press
