Johannesburg - The Competition Commission is investigating the R2.15 billion transaction between the Gupta family-owned Tegeta Exploration and Resources and mining conglomerate Glencore.
The commission said yesterday that it had received submissions from various stakeholders raising concerns about the deal, which saw Tegeta buy Optimum Coal from Glencore to supply Eskom’s Hendrina power station with coal.
Read: Glencore faces court over Gupta deal
The deal came after Glencore and Eskom locked horns over the supply of 5.5 million tons of coal per year to the station. The commission spokesman, Itumeleng Lesofe, confirmed the investigation, but refused to comment further.
Shrouded transaction
Business Report can reveal that one of the interested parties, the National Union of Mineworkers (NUM), last week wrote to the commission urging it to probe the conduct of the merging parties involved in the deal. It said the commission should investigate the secrecy that shrouded the transaction from the start.
The NUM wants the conducts of Optimum Coal mine, its shareholders, the business rescue practitioner and the acquiring entity examined in the light of the NUM, as a majority labour union at Optimum, not being consulted about the disposal of the assets.
Business Report is in possession of the copy of the NUM’s submission to the commission, which was made last Monday (January 25) and signed by the union’s head of transformation, Luthando Brukwe. It said the deal would result in further job losses on top of the more than 600 people retrenched last year.
Read: Glencore 'worked' with govt on Gupta deal
“We are also calling for the transparent disclosure of all information related to the transaction, like the current mining rights held by (the) proposed buyer, Tegeta Exploration and Resources,” it said.
Yesterday, Business Report reported that the Tegeta transaction was facing a legal challenge from Endulwini Mining, a company that is owned by SA Mining Development Association chairman Peter Temane, acting in his personal capacity, and Sipho Dube.
Talks broke down
Tegeta defended its deal, charging that it was above board and that everything was done to save a struggling company.
Spokesman Haranath Ghosh said Tegeta had been in talks with Optimum through the business rescue practitioners for several months.
“During these months, the talks broke down on at least two occasions when the business rescue practitioners believed they had a more compelling offer from other parties,” Ghosh said. “We accepted their decision to seek exclusivity with other parties to find a suitable buyer.”
But Business Report can reveal that Endulwini had made a firm offer to purchase the Optimum mine by August – five months before Tegeta was awarded the deal and weeks after Glencore was put under business rescue when it argued that the R2bn penalty demanded by Eskom would hamper its bottom line.
Endulwini alerted the NUM to their bid on August 5 and asked the union to back them as a “proudly South African and historically-disadvantaged controlled company”.
The company said it would guarantee the continuing employment of 1 067 workers with concomitant remuneration benefits to them, the security of coal supply for Eskom and continuing production with relevant tax benefits for the fiscus.
Its offer of purchase included share ownership of assets by workers and affected communities to carry an unencumbered 10 percent each.
But despite Endulwini putting a firm $200 million (R3.17bn at yesterday’s rate) offer on the table, it lost the bid to Optimum, which clinched it for R2.15bn.
The business rescue practitioners, Piers Marsden and Peter van den Steen, yesterday issued a statement claiming that the Tegeta deal was above board.
Binding offer
The two said they would oppose any court challenge by Endulwini. “The joint business rescue practitioners considered all options to rescue the Optimum business and the Tegeta transaction was the only binding offer received, and presented the most compelling value for all stakeholders of Optimum,” the two said. “Accordingly, any court action against the business rescue practitioners would be without merit and would be vigorously defended.”
Mineral Resources Minister Mosebenzi Zwane yesterday said that the decision to take Optimum into business rescue was done to save the company from liquidation and to protect 3 000 jobs.
He said the Tegeta-Optimum deal had to be welcomed as a significant step towards the government’s move to develop black industrialists and broaden economic empowerment.
“I will not hesitate should similar circumstances arise involving other players. I see such interventions as critical to revitalising our industry as is the swift resolution of Section 11 applications, a concern raised by many mine owners during my various engagements with them,” he said.
* Additional reporting by Dineo Faku
BUSINESS REPORT