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Gupta-Zuma coal deal cleared with vow to keep SA jobs

Feb 12 2016 15:09

(iStock)

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GLENCORE PLC [JSE:GLN]

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ARCELORMITTAL SOUTH AFRICA LIMITED [JSE:ACL]

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Last Updated: 23-09-2016 at 05:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - A company controlled by the Gupta family said it will preserve jobs at a mine that it bought together with the son of President Jacob Zuma from Glencore [JSE:GLN] after the Competition Commission recommended approval of the purchase.

The Guptas’ Oakbay Investments committed “to the future success of the business and to its employees,” chief executive officer Nazeem Howa said in a statement on Friday. “Through this acquisition we have prevented a liquidation that would have seen 3 000 people lose their jobs.”

The Competition Commission on Thursday recommended that the Competition Tribunal approve Tegeta Exploration & Resources purchase of the Optimum coal complex for R2.15bn. Tegeta is joint-venture between Oakbay and Mabengela Investments, in which Zuma’s son, Duduzane, has a stake.

The revelation of Duduzane Zuma’s involvement in Tegeta came hours before the president gave his annual State of the  Nation address in parliament and after mounting criticism of the president’s links with Guptas, whose companies have employed his daughter and one of his wives.

Duduzane sits on the boards of a number of companies along with at least one of the three Gupta brothers who run the family business, and has had ventures with them including a failed attempt to buy as stake in the local unit of ArcelorMittal SA [JSE:ACL].

Political spin

“It’s just a stupid thing to do. It reflects very badly on the government,” said Theo Venter, a political analyst at North- West University in Potchefstroom. “They might present a lot of political spin, but the people in the know can deduct what is going on here.”

Members of the opposition Economic Freedom Fighters (EFF) walked out of the president’s speech on Thursday calling Zuma a ‘joke’ and with their supporters holding up signs saying “Zupta must fall,” a reference to the relationship between the Zuma and Gupta families. The EFF, along with another opposition party, had delayed Zuma’s speech by an hour with frequent interventions.

The sale to Tegeta was agreed in December after Mines Minister Mosebenzi Zwane met with Glencore CEO Ivan Glasenberg to advance the deal. Glencore went into administration after Eskom refused to renegotiate a supply contract in which Optimum was making a loss.

Jobs threatened

Since the deal, Eskom started buying coal from Optimum to supply its nearby Arnot power station after a supply contract with Exxaro Resources wasn’t renewed, threatening about 2 000 jobs. Tegeta will still be expected to pay a R2.3bn fine incurred by Glencore for breaching the terms of a coal supply contract, according to Eskom.

The Guptas have previously landed a jetliner bearing wedding guests from India at an air force base that as a “National Key Point” is prohibited from undertaking commercial activities.

Zwane’s decision to advance the deal has been criticized by the main opposition Democratic Alliance party.

No bias

The minister said he didn’t give Tegeta any preferential treatment and he was only interested in preserving jobs. When Zwane was appointed, South African newspapers including Business Day reported that he was linked to the Guptas.

The Sunday Times said a delegation from the Guptas was in Switzerland at the same time as he met Glencore. He denies the link. Zwane’s spokesperson, Martin Madlala, said he will respond later to e-mailed questions.

“The only way the government can now ensure the country that this deal was above board is to show all details of it” and of all the accords that the Gupta family has done with Eskom, James Lorimer, a lawmaker for the Democratic Alliance, said in an interview.

“It is highly problematic that not only has the current mining minister extensive connections with the Gupta family, but that the president’s son is also involved.”

The Competition Commission recommended that the Competition Tribunal approve the transaction, provided that no jobs are lost as a result of the deal.

Eskom said it isn’t concerned who owns the mine.

“Eskom’s primary concern is supplying its power stations with coal,” Khulu Phasiwe, a spokesman for the utility, said by phone. “As to who owns what, it’s none of our business.”

Glencore declined to comment.

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glencore  |  mining  |  jobs

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