Business

What happens when the biggest mine in the area shuts shop? A disaster

2019-05-07 20:55

The ongoing business rescue at Optimum Coal has finally claimed its first victims – more than 400 workers at the mine were served with retrenchment letters last week.

This is the first retrenchment since the Guptas took over the mine in 2015, and a year after the mine was placed under business rescue in February 2018.

Read: Gupta front quashes state-owned mining company’s bid to revive Optimum

Some of the workers affected by the retrenchment were part of the group who protested against Mineral Resources Minister Gwede Mantashe when he attended a ceremony at the nearby Arnot mine on May Day earlier this week.

City Press spoke to Richard Mkhuzulu, the National Union of Mineworkers (NUM) branch secretary at Optimum. He painted a bleak picture of the conditions workers are currently going through while the business rescue process drags on.

Speaking from his home at Mhluzi, a township outside Middelburg, Mpumalanga, Mkhuzulu said the closure of the biggest mine in the area had already had devastating consequences, and the recent retrenchments had all but dashed hopes of an economic recovery for the workers.

Mkhuzulu said that although the workers were told that the process would be completed by July, he doubted the veracity of this statement.

“The last time I checked, there have been more than 50 court cases delaying the process. As employees, out of desperation we went to the [business rescue] practitioners and asked to be terminated so that we could access our pension monies. But nothing has happened.”

Mkhuzulu said 75% of the workforce at the mine were contractors, adding that the financial straits workers found themselves in had gone beyond vehicle and house repossessions.

“We had to go the municipality to negotiate that at least we be exempt from paying rates and instead be allowed to buy electricity – because the rule is, you can’t buy electricity if you haven’t paid rates,” he said.

He said workers had to resort to queuing at soup kitchens, organised by charities in the area.

“For us as leaders, it is very painful because we have even lost members. They died because they could not access medical services, even though they were on chronic medication. They did not have medical aid,” Mkhuzulu said.

In addition, almost all the mines in the area’s coalfields do not have hostels, unlike some of their counterparts in the gold and platinum sectors – meaning the consequences of the problems are transferred to the mine-hosting communities, adding to the burden of the municipality.

While he did not absolve the current administration entirely, Mkhuzulu blamed the situation on former mining minister Mosebenzi Zwane. “We are in this mess because of the Guptas and Zwane. He was the first minister to come to Optimum and pretended to be pro the working class as soon as the Guptas took over.

“At some point, the management even tried to mobilise us so that when Zwane visited, we should write placards criticising the banks for closing Gupta bank accounts. We were also encouraged to go and protest at the banks. The then CEO, George van der Merwe, was the one telling us to go there [to protest at the banks],” he said.

Mkhuzulu said NUM had knocked on several doors, including those of the department of mineral resources and the presidency, pleading for help, to no avail.

“Zwane and his crew were wrong but at least decisions were taken, even if they were wrong. Right now, there is no decision being taken. Mantashe is not taking any decision and people are suffering,” Mkhuzulu said, adding that NUM members were disappointed at government’s reaction to the situation.

He also criticised the business rescue practitioners, claiming that when they took over, they did not pay over the taxes collected from workers.

“This process is dirty because some of these practitioners want to get money out of this,” he said.

Mkhuzulu added that at least one bidder for the mine, Seriti Resources, had told NUM that it was pulling out after allegedly being asked for a bribe.

Mike Teke, the chief executive of Seriti Resources, confirmed that the company had shown an interest in acquiring Optimum during the early stages of the bidding process, but had pulled out to focus elsewhere.

Teke denied having been asked for a bribe, saying he did not know where the allegation originated.

Mkhuzulu said he feared that with the process to seek new bidders restarting, the same factors would taint it, pushing workers deeper into economic hardship.

He said that as tragic as the latest retrenchment letters might seem, to some workers this communication meant nothing.

According to Louis Klopper, one of the mine’s business rescue practitioners, the process had to be restarted as Eskom had made additional demands when the process was almost complete and a decision on the successful bidding company had been finalised.

“The process was complete the first time around, but it was suspended because Eskom insisted that it wanted to engage on the coal supply agreements,” Klopper said.

Klopper added that the process should be completed by end-July, when a meeting of the creditors will be held and a preferred bidder decided on.

“The number of employees who’ve been retrenched is approximately 600 at Optimum,” Klopper said.

He attributed the retrenchment to the unsuccessful post-commencement finance process, which would have required upfront funding from the preferred bidder.

He said the process of advertising invitations to bidders had already begun.

Project Halo, said to have been the preferred bidder late last year when the rescue was almost completed, would have to resubmit its bid again if it was interested, said Klopper.

He said he could not recall if Seriti was ever in the running when the bidders were initially invited.

Mbongiseni Duma and Paul Buckley, two of the directors of Project Halo, declined to comment on the matter.



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November 10 2019