Johannesburg - South Africa’s biggest opposition party said the country’s mines minister and state power utility “forced” Glencore to sell its Optimum coal operation to a company controlled by the Gupta family, friends of President Jacob Zuma.
Mines Minister Mosebenzi Zwane met Glencore officials in Switzerland ahead of the sale of Optimum to the Gupta’s Tegeta Exploration & Resources in December, the ministry said in a February 1 statement. Johannesburg’s Sunday Times newspaper reported that a delegation representing the Gupta family was there at the same time.
Optimum was placed in business rescue proceedings, a form of bankruptcy, in August after Glencore said its contract to supply coal to power company Eskom Holdings was unviable, leading to the operation’s sale to Tegeta for R2.15 billion ($133 million). Eskom had refused to renegotiate the contract and says it will hold Tegeta to the same arrangement. It also fined Optimum R2 billion over the quality of the coal it was supplying.
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“The evidence currently suggests that Zwane and Eskom contrived to make Optimum unviable for Glencore to operate,” Democratic Alliance Shadow Minister for Mineral Resources James Lorimer said in a Tuesday statement. “Once Glencore was forced to sell the mine to the Guptas, it was then arranged that the path for Tegeta would be eased to get supply contracts with Eskom and get let off a considerable fine.”
Zwane participated in the sale in the interest of saving jobs at Optimum, his ministry said on February 1. Eskom didn’t participate in the sale of Optimum and is only interested in the continuation of its contract at the same price, volume and quality, spokesman Khulu Phasiwe said by phone on Wednesday. Glencore referred to a January 31 statement, in which it said it was “pleased with the terms of the transaction”.
Glencore has also said that it engaged with the South African government over the sale and didn’t answer a question as to whether its CEO Ivan Glasenberg met Zwane. The business rescue practitioners considered the Tegeta bid as offering the “most compelling value for stakeholders,” they said in a statement.
Optimum is now supplying coal to Eskom’s Arnot power plant at a cost of R150 a metric ton, Nazeem Howa, the chief executive officer of the Gupta family’s Oakbay Investments, said in an interview with the South African Broadcasting Corporation. Glencore had sought R530 per ton from Eskom for coal from Optimum, Eskom has said.
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“How is it that what was an unviable operation all of a sudden viable? Is it really possible to turn it around like that?,” Lorimer said in an interview. “We need to know exactly how Zwane became involved in the deal with Glencore. Who approached who? What did he offer to whom? What did he bring to the table?”
A spokesman for Zwane declined to comment further.
BLOOMBERG