Mining halts as Pandor, partners fight over executive positions
Local firm and Chinese group in six-year dispute
BEE mining consortium Genorah Resources, which is led by the husband of Minister of International Relations and Cooperation Naledi Pandor, and Chinese partners, is entangled in a six-year dispute over the control of a platinum-mining operation in Limpopo.
At the centre of the dispute between Sharif Pandor and Zijin Mining Group are disagreements over who should appoint a chief operations officer (COO) and decide on the reporting lines for executives and how many seats each entity should receive in the board.
The two companies are failing to agree on who should appoint the mine contractor to commence with the mining operations.
So costly has the dispute been to the two companies that their mining licence is due to expire in June wit out having mined the platinum, despite having being the holders of the mining rights for more than seven years.
Zijin, one of the 10 biggest mining companies in China, went into a business partnership with Genorah Resources after buying 74% shares of Genorah’s mining right for R300-million in 2015.
The mining giant also effectively acquired 60% of the holding company Nkwe Platinum Limited from Genorah Resources, and it also took control of the company by buying out the minority shareholders’ 40%.
Nkwe Platinum Limited was initially listed on the Australian Stock Exchange, but it was delisted immediately after Zijin acquired 100% ownership of the company in 2019, after buying out the minority shareholders.
Genorah Resources is still involved in the South African arm of Nkwe through their 26% shareholding of the mining rights.
In their disagreements, which have seen the two companies trading accusations and counter-accusations against each other, Zijin, which owns the majority of shares at 74%, believes it has the right to decide who should be appointed mine contractor and COO.
Zijin also does not agree with Genorah Resources’ proposition that it should be given the responsibility to appoint the COO of the Nkwe Platinum SA.
According to a presentation by Zijin, prepared to the community of Garatau in Limpopo and dated October last year, the Chinese mining company accused Genorah of refusing to meet with them to finalise the proposed joint venture, which will in turn develop the mine.
Zijin said its relationship with Genorah – whose other directors are Maredi Mphahlele, Pandor, Mokganyetsi Violet Sithole and John Francois van Schalkwyk – has become strained and the BEE partners are also refusing to cooperate in their communication with the Department of Minerals and Energy.
“Genorah are also making it difficult for NKP [Nkwe Platinum Limited] to progress the surface lease agreements with the communities by way of its disruptive and false communications,” said Zijin in its presentation.
But what appears to be the main stumbling block standing between the two companies to commence mining is the disagreements over the control of their joint venture.
Zijin also confirmed the matter in their presentation to the local chiefs and community members of Garatau, where the company sought to clarify matters relating to the project.
“The main area of disagreement with regards to the joint-venture agreement pertains to control of the joint venture and specifically the appointment of the COO, the reporting structure of the executive team, the appointment of the mine contractor and various reserved matters for the board,” reads part of Zijin presentation in which the company also conceded that its relationship with Genorah has reached a deadlock.
In the same presentation, Zijin proposed to the community that it wanted to go ahead and mine the area and advised that a new entity should be created to act as mining contractor with the support of the community.
The mining powerhouse had indicated that Genorah Resources will remain part of the project, but only benefit in terms of profits and dividends as owners of the 24% shares of the mining right.
Genorah Resources founder and director Maredi Mphahlele confirmed that the company has been involved in a dispute with their Chinese partners for the past six years. He said the dispute has nearly cost them their mining licence because they have not been able to mine within the 12 months allocated by the Department of Minerals and Energy.
Mphahlele said their dispute with the Chinese mining company has turned dirty, saying that allegations were being peddled to win over the community’s support by claiming they stole R60-million meant for the community in the sale of their shares in the mining right to Zijin Mining Group.
He said their company was not refusing to meet with their partners to finalise the joint venture, but said had they asked Zijin to provide them with certain documents relating to their acquisition of 100% of Nkwe Platinum Limited because there was now a dispute with the minority shareholders whose shares were bought by Zijin to take over full control of the parent company.
He said Zijin has been delaying the provision of the budget needed to kickstart mining. Mphahlele said though they also have disagreements over the appointment of executives to run the venture, it was not the main genesis of the platinum mining dispute.
Mphahlele said their disagreement with the Chinese mining partners was because Nkwe Platinum Limited, which is controlled by Zijin, wants to form a separate company to execute the mining project.
“NKPL does not want Genorah to participate in the management of that company … Genorah has no problem with NKPL taking the lead in the project but insists on being involved in the operations commensurate with its 25% share,” he said. “Genorah wants to participate in the decision making at operation level and not be relegated to being a fronting black partner.”
“What is currently taking place at the Garatau Platinum mine project can only be described as a cruel joke on poor black people, whereby foreigners in the form of Chinese companies are knowingly giving false commitments to the South African state with the active participation of accounting politicians who are cynically receiving financial inducements in the background,” concluded Mphahlele.
Allegations were peddled to win the community’s support