[miningmx.com] – THE Industrial Development Corporation (IDC) said it had not been approached to take a role in a consortium to buy ArcelorMittal’s 50% stake in Kalagadi Manganese.
The shares in Kalagadi Manganese, which has built a manganese mine and sinter plant in the Northern Cape province, became available following a falling out between ArcelorMittal and Kalahari Resources, the unlisted company which owns 40% in Kalagadi Manganese.
The IDC owns the remaining 10% in the company and has a pre-emptive right to restore its stake to 20% of the overall project, its ownership level before ArcelorMittal invested in the project in 2007.
Abel Malinga, divisional executive of mining and manufacturing at the IDC, said in an interview with Miningmx on November 26 that the focus of the organisation was on financing the remainder of the project. It includes building of a smelter the bankable feasibility of which was underway, he said.
“We have not been approached on a role. We have rather been in discussions with Kalahari Resources on terms of a funding proposal for the two phases of the project (mine and sinter). Our energy has been directed in completing the project,” he said.
Malinga added that the IDC may even waive its pre-emptive rights “… if that were in the best interests”.
ArcelorMittal said on November 15 that it had signed “a definitive agreement” with Kalahari Resources CEO, Daphne Mashile-Nkosi, or a nominee company, to whom it would sell the shares in Kalagadi Manganese for a minimum of R3.9bn, equal to $447m at current exchange rates.
The Luxembourg-based steelmaker had already invested $440m in the Kalagadi Manganese project including the as yet unbuilt 320,000 tonne/year high carbon ferromanganese smelter at Coega in the Eastern Cape. Including the smelter, the total investment is R10.7bn.
Malinga said he could not be certain the smelter would be built citing electricity costs as a potential dealbreaker. “We are waiting for the bankable feasibility study. We need this finished in order to indicate if it is viable, or not. If not, that we may look at technology that would be more energy efficient,’ he said.
Mashile-Nkosi’s nominee company could comprise a consortium of shareholders currently invested in Kalahari Resources, the company that Mashile-Nkosi founded.
In June this year, ArcelorMittal was ordered by the South Gauteng Court to pay R241m to Kalagadi Manganese. According to ArcelorMittal, it had withheld the capital because it had discovered during a due diligence that the project’s mining permit was owned by Mashile-Nkosi’s Kalahari Resources.
Mashile-Nkosi denied the charges and said that it might be better to pursue the project independently.
The agreement with ArcelorMittal turns on Kalahari Resources or the nominee company funding the deal within 90-days – a deadline Mashile-Nkosi told Business Day she was confident of meeting.
