SALGAOCAR PARTNER WANTS OVER E1.6BN FROM GOVT

The train which transported unprocessed iron ore for Salgaocar.

MBABANE – A foreign investor that had a stake in Salgaocar Swaziland (Pty) Ltd which was involved in Ngwenya Iron Ore Mine wants compensation of over US$141 million (E1.6 billion) from the kingdom.

This is based on allegations that the country expropriated 50 per cent shares in Salgaocar Swaziland (now SG Iron Ore Mining (PTY) Ltd) that belonged to the investor. 
The investor’s name is Southern Africa Resources Limited (SARL), which had a joint venture deal with the country to run Ngwenya Iron Ore Mine. SG Iron Ore Mining ceased operations at the mine around October last year, and the nation was made to understand that this was mainly due to a slump in international prices of the mineral. 

However, two days ago the investor, through an American based international consultant known as Kimberly Public Affairs, announced that on January 22, 2015 submitted a notice of dispute and intentions to bring international arbitration proceedings against the kingdom.

A  Notice of Dispute document from Kimberly Public Affairs’ PR Consultant, Brittany Hicks, stated that SARL would bring its claim of E1.6 billion, plus damages and interest before the International Centre for Settlement of Investment Disputes (ICSID). This institution is part of the World Bank Group.  Swaziland became party to the ICSID Convention on July 14, 1971.

The document, which was also published by PR Newswire in the United Kingdom, posited that SARL invested over US$50m (around E500m) in the Ngwenya mining project. Furthermore, it alleged that an individual who was appointed into the Board of Directors of SG Iron Ore Mining engineered the collapse of the project.

“The collapse of the project was orchestrated by the appointee , whose main intention appears to have been to avoid repaying the loan/advance dividend of USD 10 million (E100m) that SG Iron Ore made to the country in 2012,”SARL Counsel William Kirtley of Dugué & Kirtley AARPI based in France alleged in the document.

The notice of dispute alleged that in the beginning of August 2014, the appointee did not permit any further iron ore to be sold, despite vessels arriving at the port to load the cargo, starving the company of cash. The appointee is also said to have then used the artificial cash crisis as a pretext to request that the company be placed under judicial management and then liquidation.

Minister categorically  denies the allegations

MBABANE – The minster of Natural Resources and Energy, when asked about this report, stated that it is trying to create an incorrect impression of the facts. 
Minister Jabulile Mashwana said the true facts are as follows;

“This is a commercial transaction.  SG Iron Ore Mining (PY) LTD formerly Salgaocar Swaziland (PTY) LTD is registered in terms of the company laws of Swaziland with 25 per cent share held by the Government of Swaziland, 25 per cent shares held by the iNgwenyama in trust for the Swazi Nation and 50 per cent shares held by Southern Africa Resources Limited (SRAL) formerly Salgaocar Resources Africa Limited.
“A shareholder dispute arose at the parent company level (SRAL). While this dispute was ongoing, there was a gradual decline of the iron ore price. 

“Interestingly, this dispute arose prior to the fall of the price and when the two events coincided there was noticeable absence and inaccessible from the Chairman of the company, Mr Shanmuga Rethenam.
“In such circumstances the company’s local Directors had no option but to take steps to protect the company, the investor and the creditors, by applying for judicial management on the 10th October 2014.  The aim of the Judicial Management process was to protect the company against bankruptcy.

“During the judicial management process, the judicial manager engaged the investor shareholder (SRAL) to try and resuscitate the company. 
“The judicial manager had requested for a business plan and immediate funds from the investor.  Despite numerous undertakings by the investor nothing materialized.

“With the price of iron ore continuing to fall and the company continuing to operate in an insolvent state, in the interest of the local and foreign creditors, the judicial manager had no option but to apply for Provisional Liquidation on the 16th December 2014. With no aid in any form whatsoever, the order for liquidation was confirmed on the 30th January 2015.
“The director representing His Majesty the King, in trust for the Swazi Nation in the company, when asked about this matter categorically denied that a warrant of arrest was issued or threatened to be issued against the chairman of the company. 

“Why would we want to do so in respect of a commercial transaction? The company has been placed under liquidation, a legal process that occurs regularly the world over. Any party who wished to oppose that process was at liberty to do so, they chose not to,” he said.

He categorically denied that the investment or any shares of the investor had to be expropriated and challenged anyone making such an allegation to produce facts to support such an unfounded allegation.

Minister Mashwama denied that any state organs have or will be used to “press the reset button” in order to avoid the repayment of any receivables. And she said she is confident that all issues regarding the financial affairs of the company will be dealt with in terms of the legal liquidation process.

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