PJSC “MMC “NORILSK NICKEL or Norilsk has warned that it will take its war with BCL Mine to the courts following the non-conclusion of the acquisition of Nkomati Nickel Mine by Botswana government owned copper/nickel miner.
The Russian company in 2014 announced it had entered into a binding agreement for the sale of its African assets to Botswana-based BCL Investments, which is controlled 100% by the government of Botswana.
The deal which was comprised of 50% participation interest in the Nkomati Nickel and Chrome Mine, South Africa, and its 85% stake in Tati Nickel Mining Company (‘Tati Nickel’), Botswana (together, the ‘Assets’) was worth US$337 million or P3 billion.
However, this week government said it has pulled out of the deal as it could not afford the cost of the transaction. A top official at ministry of Mineral Resources, Green Technology and Energy Security, Kgomotso Abi said on behalf of government that,” As of now, BCL is no longer viable and is therefore not in a position to pay that amount and we have informed Norilsk of this development”.
But the Russian company replied to media reports that BCL has been put under liquidation by saying it will not leave the issue lying down. It said all of the conditions precedent to the transaction was duly fulfilled. “In particular, in September 2016 the last remaining condition precedent was fulfilled when the Company obtained the consent of South Africa’s Department of Mineral Resources to proceed with the sale of the 50% interest in the Nkomati JV,” it revealed.
According to Norilsk, it provided the buyer with additional time to close the transaction, however, BCL Investments made no effort to fulfill its obligations. “On 8 October 2016, the Company learned from the media that BCL had been put into provisional liquidation,” Norilsk said.
“Following these developments the Company has decided to defend its interests under the transaction in courts with jurisdiction over the matter.”
Under the deal, the total expected consideration for the assets payable by BCL to Norilsk Nickel amounted to US$337 million payable in cash. In addition, BCL was to assume all attributable outstanding debt and environmental and rehabilitation liabilities associated with each asset.
The agreed deal structure envisaged the assignment of the Nkomati concentrate off-take agreement from Norilsk Nickel (Metal Trade Overseas AG (“MTO”) to BCL. In addition, Norilsk Nickel (via MTO) will enter into a matte off-take agreement with BCL, whereby the matte will be supplied for processing to Norilsk Nickel’s Harjavalta refinery in Finland.
The transaction was to be the largest in a series of asset disposals by Norilsk Nickel since its new strategy was presented in October 2013 with the aim to exit from non Tier-1 mining operations.
It was to mark Norilsk Nickel’s full exit from its African business, which together with earlier disposals of Australian assets represents the complete exit from international operations marked for disposal. The assignment of the Nkomati concentrate agreement and entering into the matte agreement with BCL are in line with a new Norilsk Nickel’s downstream production re-configuration strategy.
Government has been forced to place BCL under temporary liquidation in order to protect it from exposure to creditors including the failing purchase of Nkomati.