The National Prosecuting Authority (NPA), which has launched a court process to have the Optimum Coal Mine (OCM) forfeited to the state, is concerned about the deterioration of the asset under management by business rescue practitioners.
It envisages “a full-blown fight with the business rescue practitioners because [we] are concerned about the erosion of value,” NPA deputy national director of public prosecutions Ouma Rabaji-Rasethaba told members of parliament’s justice and correctional services committee on Monday. The OCM has been in business rescue since 2018 and is the object of highly contested litigation.
“The NPA is well aware that there are many persons who have lost their jobs at the mine who are hopeful [about being] re-employed in the long run. For this reason, the NPA has expressed its desire once the mine is forfeited to sell it in a transparent process at market value, so that the mine can start full operations as soon as possible.
“Unfortunately the various forms of litigation delay the finalisation of the NPA’s forfeiture application,” Rabaji-Rasethaba said.
Rabaji-Rasethaba referred to reports submitted to court by OCM’s curator, Peter van den Steen, of Metis Strategic Advisors, according to which mini-pit contractors who are mining coal at OCM have generated a potential profit of R6.3bn for the seven months between March and October 2022, while OCM had only earned an average profit of R28.5m in terms of royalties paid over that period.
The curator was appointed by the court to oversee the work of the business rescue practitioners, to care for the property and retain its value but since the business rescue practitioners remain in control over the mine, the powers of the curator are limited.
Rabaji-Rasethaba said that Van den Steen had noted in a report last week that the mini-pit operators at the mine were eroding its value, and that he wanted the business rescue practitioners to restructure the operations so that OCM derived a significantly greater share from the mining of its coal reserves.
He also raised concern about the water treatment plant being out of operation, safety and environmental issues and rehabilitation compliance and its funding.
Rabaji-Rasethaba said Van Den Steen had reported that “had OCM conducted its own mining activities, its profits would have been sufficient to settle in full all of the OCM’s creditors at current coal prices and OCM would be able to exit business rescue within a number of months.”
The NPA has already obtained two preservation orders under the Prevention of Organised Crime Act over the mine to prevent its sale pending the court application for the forfeiture of the R3.4bn shares of the Gupta-owned company Tegeta Exploration and Resources, in OCM, to the state on the grounds that the mine was acquired with the proceeds of crime. Rabaji-Rasethaba said the preservation order was obtained to prevent the sale of the mine by the business rescue practitioners back to the Guptas “for literally R1“.
A preservation order was also obtained over the Optimum Coal Terminal. Appeals against the OCM preservation order have been lodged by the business rescue practitioners, National Union of Mineworkers (NUM), the Mpumalanga Action Movement, Templar (OCM’s major creditor) and Liberty Coal, which has made an offer to buy out creditors. Liberty Coal is controlled by former Gupta associate Daniel McGowan.
The business rescue practitioners want the preservation orders suspended pending the outcome of the appeal but the NPA is opposing this.
In its forfeiture application, the NPA requests that the business rescue plans for OCM be set aside.
She told MPs that the NPA’s Asset Forfeiture Unit had written to the department of mineral resources and energy in November, detailing its concerns about the deterioration of value of the coal mine and the concerns raised by Van den Steen, but had not received a reply.
The NPA has also asked Gauteng deputy judge president Aubrey Ledwaba to appoint a case management judge to oversee the matter, and to ensure that the interlocutory applications by those opposing the preservation order could be heard expeditiously so that the forfeiture application can be dealt with.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.