The Limpopo Economic Development Agency (Leda) has gone to court to try to protect and retain its 40% stake in a chrome mine after its Chinese partner ran the enterprise into business rescue and the assets were sold to another Chinese company.
According to legal correspondence and two high-placed sources from the state-owned company and the Limpopo provincial government, the mineral resources and energy department not only declined to prevent the right from being swallowed by the business rescue process and sold to another Chinese company, the department signed the transfer of the right to the new Chinese owners.
Leda was granted the 40% non-dilutable stake of the mining right for Dilokong Chrome Mine in 2006 on condition that it could transfer it to a state-owned mining company only at a later stage.
The mining right was held under Sinosteel’s subsidiary, ASA Metals, which was 40% owned by Leda and 60% by Eastern Asia Metals Investment, a subsidiary of the Chinese parastatal, Sinosteel Corporation.
ASA wholly owned and operated Dilokong Chrome Mine, which was placed under business rescue in 2015 and its assets stripped and bought by two Chinese companies, Tubatse Chrome Minerals and Cheetah Chrome. Tubatse bought the smelter for about R350 million and Cheetah bought the mine for an undisclosed amount after Leda’s bid of R450 million failed.
“The reason for Leda to submit a bid was to take control of Dilokong Chrome Mine as Leda requires chrome minerals to support and influence the value chain in the development of the Musina-Makhado Special Economic Zone in Musina, Limpopo. Without minerals the zone will be of very little benefit to the inhabitants of this country,” reads one legal document on the matter.
Leda had offered to make presentations against the transfer of its non-dilutable 40% share of the mining right but its requests apparently fell on deaf ears.
“They ran the mine down only to buy it at business rescue and the government folded its arms,” said one senior executive close to the matter.
Leda spokesperson Patrick Monkoe said the agency was not taking the matter lying down even though he was reluctant to release more details.
“These matters are before the courts and we have been reliably advised that until they are resolved, we are unable to comment further,” Monkoe said.
“We can confirm that the court action is about retaining and protecting our 40% stake,” he said.
The sale to Cheetah Chrome, which is a special-purpose vehicle incorporated for the purposes of the proposed purchase of Dilokong Chrome Mine and is controlled by Xinganglian Metallurgical, was approved earlier this year by the Competition Commission and the consent for the transfer of the mining right was granted by the mineral resource and energy department last month.
Gordon Hebaolin, a director of Cheetah Chrome, declined to respond to questions and said the company would comment only at a later stage.
Leda, in its court papers has applied for the section 11 consent to be suspended pending the outcome of its internal appeal with the department.
According to Sinosteel’s website, ASA and Tubatse Chrome are part of its interests in the mining sector.
There was no response by the time of going to print to questions sent to Sinosteel, including about its alleged relationship with Cheetah, despite a promise to do so by its lawyers.
Leda acquired ASA’s stake in Dilokong in 1997 and the agency holds nine mining rights and prospecting permits through nine entities – namely the Corridor Mining Resources, Sefateng Chrome Mine, ASA Metals, Dilokong Chrome Mine, Fumani Gold, Tshepong Chrome Mine, Autumn Star Trading, VanMag and Attaclay.
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