Another twist in salt mining scandal
IN THE latest twist, the Northern Cape High Court has absolved SA Soutwerke (Pty) Ltd from paying damages to Saamwerk Soutwerke (Pty) Ltd in the long-running tugof-war over mining rights at Vrysoutpan near Upington.
SA Soutwerke was ordered to pay Saamwerk Soutwerke R11.9 million in damages in 2018. The amount was later amended to R9.1 million in 2021.
Saamwerk Soutwerke claimed that it had incurred profit losses of R106.7 million when it was unable to mine for 33 months.
The directors of SA Soutwerke included former ANC provincial chairperson John Block, former Upington mayor Gift van Staden, businessman Andre Johan Blaauw and his elderly mother, Cornelia Blaauw.
In 2007, Block produced a mining permit that did not have an expiry date, which was issued in 2004 by the Department of Minerals and Energy.
It was agreed that SA Soutwerke would have to apply for a new permit in line with current legislation.
During this time, Saamwerk Soutwerke was also awarded a permit, which resulted in both parties having competing claims to mine on Vrysoutpan.
It was later established that the mining permit produced by SA Soutwerke was forged.
During 2007, Saamwerk Soutwerke obtained an order in the Northern Cape High Court that entitled it to mine at Vrysoutpan.
It sought an interdict against SA Soutwerke, where it argued that SA Soutwerke had used a fraudulent permit to prevent it from mining on Vrysoutpan during September 6, 2008 and June 25, 2011.
The Department of Minerals and Energy, as well as SA Soutwerke, was ordered to pay Saamwerk’s costs.
SA Soutwerke was dissatisfied with this outcome and applied to the Supreme Court of Appeal, although it did not challenge the declaration that the mining permit was declared invalid.
During the legal wrangling, SA Soutwerke continued to mine for at least five years on Vrysoutpan without a valid permit.
SA Soutwerke maintained that it held an unconditional mining right and that Saamwerk Soutwerke had not suffered any damages.
It argued that while it had mined at Vrysoutpan for many years, Saamwerk Soutwerke did not have the operating capital, capacity, infrastructure, processing equipment, customer base, ability to mine, or market to sell salt.
Supreme Court of Appeal Judge Azhar Cachalia, who dismissed the appeal in 2011, found it disturbing that two years after Saamwerk’s legal representatives had lodged a complaint with the SAPS to investigate the forged permit “nothing was heard”, while no official was held accountable at the Department of Minerals and Energy.
In the latest development in a judgment handed down by Northern Cape High Court Judge President Pule Tlaletsi on March 31, it was ruled that Saamwerk Soutwerke had failed to prove that it had suffered damages or a loss of profits.
“The fact that SA Soutwerke through its fraudulent actions mined salt and that the Saamwerk Soutwerke could not, does not on its own prove that they suffered damages.”
Tlaletsi pointed out that prior to 2013, Saamwerk Soutwerke had not mined or traded salt and had not prepared any financial statements or tax returns as prescribed by the Companies Act and its regulations.
He stated that the financial results that were produced by Kalkpoort Soutwerke closed corporation (CC) were prepared solely for discovery purposes.
“The management accounts of Kalkpoort were found to be inadmissible in court. From June 25, 2011 salt mining of Vrysoutpan was undertaken by Kalkpoort Soutwerke CC which took all the sale mined to compensate for the debt owed to it for legal costs by Saamwerk Soutwerke.
“The probabilities are that Saamwerk Soutwerke did not have the financial resources to conduct mining on the operations.”
Tlatletsi noted that Saamwerk Soutwerke was unable to quantify damages as it was a “business without a history”.
“Both Saamwerk Soutwerke and Kalkpoort Soutwerke CC shared the same general manager and the same directors between June 25, 2011 and August 2013
“Kalkpoort paid the costs of mining on Vrysoutpan including royalties, production and transport costs.”
Tlaletsi agreed that while the fraudulent actions of SA Soutwerke had rendered Saamwerk Soutwerke financially insolvent, he pointed out that the executor of the estate would still have to prove that they had lost profits and damages between September 6, 2008 and June 25, 2011.
“The party suing for damages must set them out in such a manner that will enable the defendant to reasonably assess the quantum thereof.”