[miningmx.com] – ARCELORMITTAL is to sell its 50% stake in Kalagadi Manganese, a company that became mired in controversy earlier this year following alleged corporate governance abuses.
ArcelorMittal said it had signed “a definitive agreement” with Daphne Mashile-Nkosi, or a nominee company, to whom it would sell the shares for a minimum of R3.9bn, equal to $447m at current exchange rates.
The Luxembourg-based steelmaker had already invested $440m in the Kalagadi Manganese project which included a mine and sinter plant in the Northern Cape, and an as yet unbuilt 320,000 tonne/year high carbon ferromanganese smelter at Coega in the Eastern Cape. Including the smelter, the total investment is R10.7bn.
The nominee company could comprise a consortium of shareholders currently invested in Kalahari Resources, the company that Mashile-Nkosi founded. Kalahari Resources currently owns 40% of Kalagadi Manganese.
In June this year, ArcelorMittal was ordered by the South Gauteng Court to pay R241m to Kalagadi Manganese. According to ArcelorMittal, it had withheld the capital because it had discovered during a due diligence that the project’s mining permit was owned by Mashile-Nkosi’s Kalahari Resources.
Kalahari Resources had transferred the mining permit to Kalagadi Manganese prior to the court judgement, but the dispute was only a part of wider discomfort experienced by ArcelorMittal, including allegations it had not been allowed access to Kalagadi Manganese’s financial statements.
For her part, Mashile-Nkosi denied any wrong-doing, and said her Kalahari Resources had always been transparent with ArcelorMittal.
At the time, ArcelorMittal said it would review is position regarding its investment in Kalagadi Manganese, the outcome of which has become clear.
ArcelorMittal’s divestment from Kalagadi Manganese draws unwanted attention to the South African government’s beneficiation plans.
Commenting on the transaction, ArcelorMittal said the sale of its stake in Kalagadi Manganese has been captured in a sale and purchase agreement (SPA) and was subject to financing arrangements.
“The SPA was executed on 14 November … and on completion of the transaction, Kalahari Resources will own 40% interest in Kalagadi Manganese, Mrs Mashile-Nkosi, or her nominee, will hold 50% with the remaining 10% interest held by the Industrial Development Corporation of South Africa,” ArcelorMittal said.
Other shareholders were required to waive their pre-emptive rights over ArcelorMittal’s shares in Kalagadi Manganese, ArcelorMittal said.
