Johannesburg – The South Gauteng High Court on Tuesday ordered ArcelorMittal International to meets its obligations in terms of Kalagadi Manganese’s shareholders’ agreement.
Kalgadi‚ which is in the final stages of developing a three million tonnes-a-year manganese mine and sinter plant at Hotazel in Northern Cape Province‚ was formed in 2007 as a joint venture between Kalahari Resources (Pty) Ltd and the Industrial Development Corporation.
ArcelorMittal became part of the joint venture in 2008 by acquiring a 50% stake in the entity with Kalahari Resources holding 40% and the IDC retaining 10%.
In terms of a ruling handed down by Judge P Coppin in the South Gauteng High Court‚ ArcelorMittal must pay R241.3m to Kalagadi within 10 days‚ to comply with its shareholder obligations and pay the costs of the court proceedings. The court also ruled that ArcelorMittal was obliged to discharge its financial obligations in the future‚ pro-rata to its shareholding in Kalagadi Manganese.
Another aspect of the court’s ruling was that ArcelorMittal’s application to have Kalahari Resources placed under “business rescue” was struck from the roll with costs.
The three members of the Kalagadi joint venture agreed on a funding strategy in 2009 outlining each party’s equity funding obligations and plans to raise external debt funding in South Africa and on international markets. The equity element of the funding was set at 40% (R4.2bn) and the debt element at 60% (R6.5bn).
Apart from developing an ultra-long life manganese mine and the sinter plant which is scheduled to be “cold commissioned” at the end of July and “hot commissioned” by the end of October‚ Kalagadi Manganese also has plans to develop a smelter at Coega in the Eastern Cape that will produce around 320 000 tonnes a year of high carbon ferromanganese from 2014.
Reacting to the High Court decision‚ Kalagadi chairperson Daphne Mashile-Nkosi said it was a significant step forward for the joint venture and was especially good news for the Northern Cape and Eastern Cape provinces‚ two of the poorest regions in South Africa.
“It means the people of the Northern Cape will get their two-in-one project – the mine and the sinter plant - while the people of the Eastern Cape will get the smelter which will provide a major anchor project for the port of Coega‚” she said.