Tuesday, December 5, 2023

Russians bay for Gov’t blood

The fed up Norilsk Nickel Group (Nornickel) this week confirmed that it will continue with its multibillion pula lawsuit against the Botswana Government.

On Tuesday following a setback delivered by a judgement from Botswana’s High court which turned down the Russian miner’s attempts to defend its rights in the London Court of International Arbitration, Norilsk has vowed to fight to the bitter end and to use every avenue possible to recover its dues.

Michael Marriott, Group CEO of Norilsk Nickel Africa, says the company is disappointed by the court’s ruling and remains dismayed by Botswana’s authorities’ disdain for investors’ rights.

“We applied to the Botswana court for a permission to defend our rights in London in 2016.  For no good reason, it then took the court over 16 months to consider this very straight-forward matter.  We are now left with a deeply unsatisfactory judgment which has denied us the ability to get on and resolve this dispute through impartial, international arbitration, despite our right to do so under our contract with BCL,” he said in statement released Tuesday.

The London Court of International Arbitration, was the contractually agreed forum in which disputes are to be resolved, however the two parties have been slugging it out between the Botswana courts and in some instances in South African courts.

Marriot, in a thinly veiled threat to the Botswana government, said Nornickel will use every opportunity to ensure that the government is held responsible for all of the BCL liabilities, including the liabilities to Norilsk Nickel in respect of the Nkomati and Tati transactions for the aggregate amount of about $ 277 million or about P2.8 billion.

The lawsuit is on the back of share purchase agreement between Nornickel and BCL which provided for the transfer of the ownership of the Nkomati and Tati facilities to BCL, in October 2014; in September 2016 the agreement became unconditional. BCL subsequently failed to perform its deal completion obligations and refused to make a payment for the shares. As a result, Norilsk served a material breach notice on BCL, demanding payment of the circa $277 million purchase price.

A month later after the Botswana government voided its contractual obligations, it applied to the High Court of Botswana and BCL entities were put into liquidation; eight months later, in June 2017, BCL entered the final stage of liquidation. The Botswana government has on several occasions denied that it placed BCL Group under liquidation as a pre-emptive move to Nornickel’s lawsuit.

BCL Group, made of BCL limited and Tati Nickel Mining Company, were placed in provisional liquidation by order of the High Court of Botswana on 9 October 2016. The Botswana government owns 100 percent of shares in BCL, and BCL’s wholly owned subsidiary, BCL Investments Pty Ltd, holds an 85 percent stake in Tati. The remainder of the shares in Tati are directly held by the Botswana government.

In the following months, Nornickel submitted a ‘Request for Arbitration’ to the London Court of International Arbitration to determine its claims and filed an application with the Botswana court seeking permission to commence and prosecute an arbitration in the LCIA in respect of its claim. However in March this year it appeared that the Botswana government had reached a settlement deal with Nornickel to settle the matter in court.

By end of March, Kenneth Mathambo, minister of Finance and Economic Development, had to rush against time to get members of parliament to buy in his proposal to approve the negotiated fee of $45 million to be paid to Norilsk as an out of court settlement. The proposed fee would see the government only paying a fraction of what was initially demanded by Norilsk. Faced with the prospect of paying $277 million should the deal not be approved, the members of parliament were unanimous in approving the negotiated $45 million which represented 14 percent of what Nornickel was suing for.

Four months later after the supposed out of court settlement, Eric Molale, minister of Mineral Resources, Green Technology and Energy Security, made a startling revelation during the last sitting of winter parliament, announcing that the BCL liquidator made objections to paying Nornickel, starting that the company has no legitimate claim to the $45 million.

“He then went to court at South Africa and recently lost the case. That is why I’m saying that my hands are tied because this liquidator is a court official,” said Molale. “To try and tell him what to do, i will be regarded as interfering in the judicial process. That is the conundrum I am facing,” said Molale at the time.

While Nornickel, the world’s largest refined nickel and palladium producer, was supposed to be chaffed by the South African court’s judgement that was in their favour, it was the Botswana court which dampened their spirits as it delivered the judgment precluding Nornickel from taking the case to LCIA was handed down.

Now with the out of court settlement deal possibly off the table, Nornickel has gone back to its initial demand of $277 million, putting pressure on the government that has been of recent trying to starve off repercussions of the BCL Group liquidation. Moreover, Nornickel has filed a reckless trading claim against, inter alia, the Government of Botswana, seeking to declare it responsible for the liabilities of BCL entities.


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