Wednesday, September 23, 2020

BCL, Norilsk legal battle continues

By Victor Baatweng

Correspondence between the Russian Nickel producer Norilsk’s lawyers and those of the BCL liquidator Nigel Dixon-Warren, as seen by The Telegragh, shows that the tussle between the two is far from over.

The long standing feud has now shifted to a phase of defining whether the Nkomati mine agreement between Norilsk and BCL Limited is governed by the English law or its South African counterpart.

The dispute between the parties emanates from a 2014 deal in which Norilsk struck two agreements with BCL Limited to sell its 85 percent stake in Tati nickel mine and its 50 percent stake in South Africa’s Nkomati Nickel to the state-run nickel producer for $337m. The price was dropped to $277million. The Botswana Government decided to place BCL in final liquidation in 2016 blaming the company’s cash position and low commodity prices.

In terms of Section 11 of the South African’s Mineral and Petroleum Resources Development Act , the applicants for the transfer of a mining right, had to prove they had the requisite financial and technical ability not only to operate the deposit but to meet social and labour obligations.

In early 2017, Dixon-Warren is said to have commenced a judicial review in the South African courts on behalf of the BCL Companies in respect of the grant of the section 11 and in parallel made an appeal to the South African Minister of Mineral Resources. The South African laws require that an appeal to the Minister be made before a court hears a judicial review.  This caused a legal dispute between the BCL liquidator and Norilsk which is also questioning the liquidator’s motives and accusing him of wasting precious cash resources.

Dixon-Warren on the other hand maintains that he commenced the proceedings in South Africa because he believes the section 11 consent should be set aside and that, if it is set aside by either the Minister or the courts, that will mean that the Section 11 Condition will be treated as if it had never been fulfilled and wipe away the BCL Companies’ liability to Norilsk Nickel.

Norilsk lawyers however differ with him and argue that the BCL Liquidator appears to misunderstand the true legal position.

Norilsk Nickel explained that, as a matter of English law – which the Russian miners say is the law governing the Nkomati sale contract, the Section 11 Condition was fulfilled at the time the section 11 consent was granted.

“That is when the BCL Companies liability to Norilsk Nickel arose.  A later decision by the Minister or the court which sets aside the section 11 consent (over two years after the Section 11 Condition was fulfilled) cannot change that position.  The existing liability of the BCL Companies will remain untouched”, reads part of the argument submitted by Norilsk lawyers.

Norilsk lawyers also accuses the BCL Limited liquidator – Nigel Dixon-Warren of wasting time and money on the court process and appealed to SA’s mineral resources minister, Gwede Mantashe, to intervene over the transfer of the mining right.

The Telegragh has been informed that while the judicial review proceedings are still some way from a final hearing the Minister of Mineral Resources in South Africa – Gwede Mantashe had not engaged with the BCL Liquidator’s appeal until only recently after he confirmed that he will now proceed to decide the Liquidator’s appeal.

Meanwhile in an updated affidavit before the Pretoria High Court, Warren Dixon stated that it is his statutory duty to interrogate the alleged US$ 277 million claim in circumstances where BCL and its subsidiary BCL Investments could never afford such investment and where the very basis of that claim is an arbitrary and unlawful decision by the Director General of Department of Mineral Resources among others.

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The Telegraph September 23

Digital edition of The Telegraph, September 23, 2020.