Saturday, September 26, 2020

Conflict of interest mars Norilsk bid to buy BCL

Plans by Norilsk Nickel to buy the BCL copper and nickel mine in Selibe Phikwe have hit a snag following ethical concerns raised by the BCL board of directors.

Norilsk Nickel which owns a controlling stake in Tati Nickel and a minority stake in BCL has made a proposal to the Botswana government to buy the BCL mine.
BCL board members representing the government of Botswana have however objected to the Norilsk bid, citing conflict of interest. The Russian metal company has representatives in the BCL board of directors.

The two sides in the BCL board could not reach an agreement on the issue and legal opinion was sought to resolve the dispute. The legal opinion by an independent law firm confirmed the conflict of interest in the Norilsk bid.
Permanent Secretary in the Ministry of Minerals, Energy and Water Resources, Gabaake Gabaake confirmed this week that a legal opinion was tabled at a recent BCL meeting, but would not go into details.

Gabaake told The Telegraph that there are no plans to sell BCL, stating that it would not be wise to sell under the current economic conditions.

In a curious turn of events, Ron Langford who was representing Norilsk in the BCL board resigned last month, while another Norilsk representative and chairperson of the BCL board of directors has indicated that he will step down from the board end of December.

Sources close to Norilsk however told The Telegraph that the resignation of the two BCL board members has more to do with the shake up at Norilsk head office in Russia than the conflict of interest at the BCL board.

Norilsk Nickel is currently reeling from a host of crises, environmental violations, and claims of ethical violations to financial problems. Earlier this year, Russian authorities decided to examine the financial position of Norilsk Nickel and its transactions carried out in favor of shareholders. The Russian government was investigating allegations that the company’s entrepreneurial activities serve the interests of a narrow group close to the Norilsk Nickel management, and also reports that the metals giant is illegitimately spending money and assets.

The company’s woes have not been helped by its latest financial results.
Norilsk Nickel reported two months ago that its net profit under International Financial Reporting Standards declined 84%, year-on-year, in January-June 2009 to $439 million.

Revenues in the reporting period were halved to about $4.1 billion, the metals giant said in a statement.
“In the first six months of 2009, revenue from metal sales declined by 54% to $3.3 billion mostly due to the global commodity market prices being significantly below prior year levels,” the statement said.

Gross profit fell 71% to $1.3 billion, operating profit slumped 71% to $963 million and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) plunged 68% to $1.4 billion, the statement said.

Late last month, the Norwegian government announced that it was excluding shares of the cash strapped Russian metal giant from the portfolio of the Government Pension Fund of Norway.

The decision has been made under the ethical guidelines outlined by the fund’s Ethical Council due to extensive environmental degradation related to the company’s activities on the Taymyr Peninsula.

Norway said Norilsk Nickel facilities on the peninsula emitted unacceptable amounts of sulfur dioxide and heavy metals in the atmosphere.
Norway’s Finance Ministry sold Norilsk Nickel shares held by the Government Pension Fund of Norway by October 31.

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