15 April 2024 | 11:29 AM

The great iron ore heist

Key Takeaways

Documents obtained by the Mail & Guardian have swept aside the corporate and political veil drawn over the grubby fight for nearly a quarter of the multibillion-rand Sishen iron ore mine.

Earlier this year the M&G revealed that an obscure but politically well-connected shelf company, Imperial Crown Trading 289 (ICT), had been granted “prospecting rights” over the existing mine area, despite an application by the Sishen Iron Ore Company (SIOC) to obtain mining rights over the 21,4% of the mineral rights that it did not already control.

The rights, relating to a well-established and highly profitable mine, are worth billions. They form the core of a dispute between SIOC, controlled by Anglo American through its subsidiary Kumba, and steel-maker ArcelorMittal.

Mittal held the minority rights as a consequence of the break-up of the old Iscor, but lost them when the company failed to apply to retain its “old-order” rights in terms of new minerals legislation.

The rights also form the basis of a dispute between the SIOC and the department of mineral resources.

The SIOC suspects that the application process was manipulated to benefit ICT and in May this year launched a high court application to review and set aside the decision to award prospecting rights to ICT — a company with no track record, but whose shareholders are close to the ANC.

But the details of the controversial award process and SIOC’s objections have been kept tightly under wraps — until now.

The court file relating to the SIOC review application has remained mysteriously untraceable at the North Gauteng High Court in Pretoria and the SIOC has refused to make copies available.

The secrecy is thought to be caused by pressure coming from factions in SIOC and Anglo, which is understood to have other applications to convert its old-order rights pending before the minerals department. This group fears that open conflict with the government will jeopardise its other operations. According to this view, a quiet negotiated settlement is politically prudent.

Another faction believes that a line must be drawn against what Business Day this week termed a “Venezuela moment” — when it becomes accepted that business opportunities are obtained from political pay-offs rather than according to a set system in law.

This week the M&G obtained a copy of the SIOC application — and it discloses what appear to be serious irregularities in the awarding of prospecting rights:

    • The ICT application was stamped by the minerals department as received on May 4, whereas the signature on the application form is clearly marked May 5. Survey plans attached to the application are dated May 8 and 9.

The SIOC argues: “In circumstances where the application itself was only signed on 5 May 2009 … and where the requisite plans … were signed on later dates, it is not possible that on 4 May 2009 ICT lodged a complete and valid prospecting right in the prescribed manner.”

The date is significant because minerals legislation generally obliges the department to deal with competing applications on a first-come-first-served basis, unless they are received on the same day, in which case other factors, such as empowerment, may be taken into account.

  • The department has stated that the applications from SIOC and ICT were received on the same day, but the SIOC court papers disclose that it applied on Thursday April 30, the day Mittal’s rights were to expire. It says it made arrangements with officials in Kimberley and Pretoria to stamp the application as received on Friday May 1, a public holiday. SIOC’s application fee was receipted on Monday May 4.
  • The SIOC alleges that when it found out about the ICT bid it sent representatives to the minerals department’s office in Kimberley on June 19 to lodge a formal objection. They were allowed briefly to peruse the ICT prospecting right application. “The most striking feature … was that the stamped original of the preamble to Sishen’s mining right application was contained in the ICT application file.”

Suspicious that their application had been made available to ICT, the SIOC officials queried this irregularity with advocate Charlie Lerumo, who was handling the matter: “While Lerumo did not respond to this query, he did appear to be highly uncomfortable when it was raised.” The company claims that the department’s regional manager later told them that the acceptance of the ICT application had been a mistake and would be reversed. But this was never done and no response to SIOC’s formal objection was ever received.

  • The SIOC tried repeatedly to set up a meeting with the department’s deputy director general, Jacinto Rocha, to raise their concerns about a prospecting right being granted over an established and active mine. Finally, on October 16, Rocha, who has since left the department, refused to meet, on the basis that he was not prepared to be “lobbied”.On November 30 Rocha granted the ICT application.

    The SIOC argues that the legislation permits acceptance of an application for a prospecting right only if “no other person” holds rights for “the same mineral and land”.

  • The May 2009 ICT application was signed by Archie Luhlabo, a former member of the Mineworkers Investment Company, but according to other information obtained by the M&G, Luhlabo and other directors of ICT were only formally registered on March 15 this year and the registration was effectively backdated — and the ICT share register only reflects share transfers on March 12 2010.Both the department and ICT have filed notice of their intention to oppose the review, but have not disclosed the basis of their opposition. Department spokesperson Jeremy Michaels said the case was sub judice, but the M&G understands that both parties will focus on alleged ­procedural irregularities in the SIOC’s own application.

    These include:

  • The premature lodging of the SIOC’s application on April 30, when Mittal’s rights had not yet expired;
  • The “arrangement” to predate the application as having been received the next day, which was not a working day;
  • The supposedly irregular access obtained by the SIOC to the ICT file.

    Who is imperial Crown Trading 289

    According to a written reply to a parliamentary question by Susan Shabangu, the minister of mineral resources, on June 7, the shareholding of ICT is made up as listed below. Some percentages differ from the M&G’s calculation based on the issued shares, which are recorded in brackets.

    Pragat Investments 50% (50)

    This is said to be the personal vehicle of Jagdish Parekh, a key executive in the service of the Gupta brothers, friends and benefactors of President Jacob Zuma and his family.

    The Gupta conection gives rise to a perception of conflict of interest for Gupta business partner Lazarus Zim. Zim is a director of the Sishen mine parent company, Kumba Iron Ore. Kumba declined Zim’s offer to recuse himself from the Sishen dispute, but he is said to be opposed to taking the legal route.

    Zebo Lesego Edwin Tshethlo 20% (16,66)

    Tshethlo is apparently a municipal manager of the Kgalagadi district municipality.

    Phemelo Ohentse Robert Sehunelo 7,5% (8,33)

    An advocate, Sehunelo served as Northern Cape provincial director of housing and city manager of Kimberley, but now holds business interests in the Northern Cape. He served on a ministerial task team on mining procurement in the Northern Cape and is a business partner of well-connected Kimberley businessman Trevor Pikwane.

    Pikwane and Sehunelo are involved in the controversial proposed Bongani Minerals tungsten mine on the Cape west coast.

    Mabelindile Archibald Luhlabo 7,5% (8,33)

    Luhlabo was a founding director of the Mineworkers’ Investment ­Company, though he resigned in 1999. He is also active in the ­diamond industry.

    Prudence Zerah “Gugu” Mtshali 7.5% (8,33)

    Mtshali is the former assistant in the ANC treasury department and reportedly Deputy President Kgalema Motlanthe’s long-term romantic partner. Oddly, both Luhlabo and Mtshali reflect their addresses as the humble home of one of Pikwane’s employees in Kimberley’s Pescodia township.

    Mojalefa Landlord Mbete 7,5% (8,33)

    Son of well-connected businessman Lazarus Mbethe, he has extensive business interests in the Witbank area, notably in coal mining.

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Before joining the amaBhungane team in 2017, Micah was the national coordinator for media freedom and diversity at the Right2Know Campaign. He holds a Masters in African Studies from Oxford University and a BA Honours in History from Wits University.

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