Kalagadi Manganese may sell assets to repay part of R3bn debt to IDC

TP Nchocho, CEO, Industrial Development Corporation

THE Industrial Development Corporation (IDC) has agreed that Kalagadi Manganese sell some of its assets in order to help repay about R3bn in outstanding loans owed to the corporation.

“What we are trying to do is a ‘work-it-out’ in partnership. That is why we have consented to some of their requests including instances where they could sell some of their assets,” said TP Nchocho, CEO of the IDC.

“I am not at liberty to go into details but we have embraced a cooperative, work-it-out approach to this matter. I’m much more optimistic about the investment,” he said.

Kalagadi Manganese and the IDC faced off in court last year as part of differing views regarding how to solve the miner’s unpaid debt. It also owed the African Development Bank an estimated R2.9bn.

The IDC requested a restructure of Kalagadi Manganese including its senior executive staff such as Daphne Mashile-Nkosi, the chairperson who founded the company. Mashile-Nkosi refused to budge.

Nchocho said today there had been a significant restructure of Kalahari Manganese with the adoption of an owner-miner operating model as well as the appointment of new chief operating and financial officers. However, the company was not generating enough cash flow to service its debt against which the IDC had raised an “unavoidable” provision, said Nchocho.

“The way the company is operating, it is washing its face. It doesn’t generate enough free cash flow to service debt obligations, but it meets its operating costs,” he said of Kalahari Manganese. Production was at about 60% of its 250,000 tons a year production capacity,” he said.

Nchocho was commenting in an interview after the IDC’s annual results presentation for the year ended March in which, at a company level, it produced a taxed profit of R2.7bn, slightly down on the R3bn in the 2021 financial year. At group level, taxed profit totalled R6.3bn for the 12 months, far in excess of the near-breakeven it produced in 2021.

Department of Trade, Industry and Competition minister Ebrahim Patel said the corporation should “tool up” in order to play a role in counter-cyclical investment. He was critical of the corporation’s increase in spending but decline in employment provided through its industrial investments.

The IDC recently announced it had taken a 44% stake in Okiep Copper Mining, a company controlled by Orion Minerals and operating in the Northern Cape province. But it also has a stake in another firm, MC Mining which is developing a metallurgical and thermal coal mine in the Limpopo province.

Asked if the IDC would consider new thermal coal investments given the energy crisis in Europe which has forced a change attitude to the fuel, Nchocho said: “We will continue to fund coal assets to the extent they supply into the country’s energy value chain. We will not fund a new larger mine for export purposes”.