Times Of Swaziland: WHY SALGAOCAR SD  CEASED OPERATIONS

WHY SALGAOCAR SD  CEASED OPERATIONS
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BY MBONGISENI NDZIMANDZE  on 14/10/2014 01:20:00


MBABANE – Reasons have been revealed why Salgaocar Swaziland Limited (PTY) LTD
has stopped its operations.
It has been revealed that there is a serious shareholder dispute that has arisen
between shareholders of Salgaocar Resources Africa Limited (SRAL) in Singapore.
This is one of the reasons which resulted in the company halting its operations.
Sihle Forward Dlamini, who is the Director of Salgaocar board of Directors
stated that on or about December 2013, the price of iron ore started a downward
trend and this impacted negatively on the company’s ability to continue its
operations.
He revealed this in an application filed by the company at the High Court where
it wants to be placed under judicial management. “The significant issues
referred above are as follows: a serious shareholder dispute arose between the
shareholders of the investor SRAL, which has resulted in proceedings being
instituted between themselves in Singapore,” he stated.
Dlamini said although Salgaocar Swaziland Limited was not fully apprised of the
nature of the dispute, it involved a challenge by Salgaocar Mining Industries in
Goa over the shares in the investing shareholder, SRAL.
“As a result of the dispute, the investor representatives at Board level are
unable to make decisions or give direction to the board due to the fact that it
is unclear from whom they take instructions. This, in turn, has resulted in the
board of the applicant (Salgaocar Swaziland Limited) being hamstrung,” he
stated.
Dlamini further submitted that the second and important issue was that the
international price of iron ore fell around January/February 2014 from E1 360
per tonne to E680 per tonne.
He alleged that this represented a new five-year low of the price of iron ore.
“It also effectively meant that the cost of processing the ore at the present
moment exceeds the price that the applicant is able to obtain from the
international market. In other words, it has become financially impossible to
operate the mine,” he submitted.
excess
Dlamini informed the court that the applicant (Salgaocar Swaziland Limited) has
around 50 000 tonnes of ore currently at Port Maputo awaiting sale and further
in excess of 50 000 tonnes at Mpaka and Ngwenya, all ready for export. He said
with the decline of prices on or about May 2014, Salgaocar Swaziland Limited
engaged in a cost-cutting exercise as well as improving the grade of the product
to enable it to sustain itself.
“However, the price of iron ore has continued to fall drastically and at the
present day, the price on the international market amounts to E550 per tonne.
Due to the economic non- viability of the project at the current market price,
the applicant decided to suspend all operations at Ngwenya Iron Ore Mine.
Instead it is in the process of carrying out maintenance of its plant, machinery
and jigging plants,” Dlamini further submitted.