Norilsk Nickel, the African arm of Russian mining operators Nornickel, the world’s largest producer of nickel and palladium, intends to commence legal proceedings against the government following “reckless trading” of a sale.
The trade, involving BCL Limited and BCL Investments Proprietary Limited (BCL), saw the sale of a 50 percent interest in the Nkomati mine in South Africa (which Norilsk believes to be owed over $271 million) and a $6.4million sale of the Tati mine in Botswana.
The government comes into the fray as it is the ultimate shareholder of BCL through its corporate MDCB vehicle.
Let’s step back a moment
Back in October 2014, Norilsk had agreed to sell its operations in Africa to BCL for $337 million, which was later reduced.
The goal of the sale was to “guarantee the long-term future of NCL’s operations”.
The waters get a little murky as BCL has always been known to rely on financial support from the Government, with most of if not all of the funding for the Nktomi deal at the hands of the Government.
In September 2016, BCL was obliged to buy Nktomi but both BCL and the Government have showed no intention on completing any deal – a major breach of the agreement with Norilsk.
Norilsk vs BCL vs Botswanan Government
Norilsk has made numerous attempts, through all means of channels, to reach a “satisfactory and amicable resolution” – to no avail.
Which brings us to today.
Norilsk has made it clear that it will open legal proceedings, seeking that the court make the Government responsible for paying all liabilities due from BCL, as well as the costs of the court proceedings.
Norilsk Nickel Africa CEO, Michael Marriott, said: “The Government has displayed a complete disregard for the fair, frank and reasonable dealing with outsiders which BCL’s insolvent circumstances demanded. It has failed to honour the obligations under the sale agreement concluded with Norilsk in October 2014.
“Throughout the process, Norilsk has acted in good faith, and given the Government and BCL repeated opportunities and offers of assistance to complete the transaction, including concessions to significantly reduce the sale price.
“Botswana has a reputation as one of the safest and best places to invest in the whole of Africa and it has earned the strongest credit rating on the continent on that basis. The way that the Government of Botswana has acted over BCL brings the validity of that reputation into question. The negative ramifications could be felt across the economy of the whole country.