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Norilsk walks out of BCL P2.7 billion deal

Publishing Date : 11 February, 2019


Russian mining giant Nornickel, also known as Norilsk Nickel —the world’s largest refined nickel and palladium producer has opted out of a 2 year tussle with collapsed mining group BCL Limited. The two parties have been in dispute, in and out of the courts of law, where Norilsk was demanding over P2.7 billion for a contract signed in 2014 relating to the sale of its African assets to government wholly owned BCL.

The agreements included a 50 percent stake in South Africa’s Nkomati mine in Mpumalanga. On Tuesday Nornickel announced a decision to terminate the contract on what it terms BCL’s “material breaches of the contract”. The BCL –Norilsk emanates from Nornickel attempts to sell its African assets. Norilsk has been operating, on 85 percent ownership, Tati Nickel mine located east of Francistown.

Tati was acquired by BCL but no payment was made to Nornickel. BCL also acquired Nornickel’s 50 percent share in the Nkomati nickel mine and the contacts were signed in October 2014. The deal which BCL Group entered into through its wholly owned subsidiary BCL Investment to diversity the company’s portfolio became unconditional in September 2016 as BCL failed to perform its obligations to purchase the shares and pay the purchase price.

 During that time the company was struggling financially and relying on government bailout. In October 2016, Botswana Government applied to the High Court of Botswana to place BCL entities into provisional liquidation. Ever since then, Nornickel, BCL and the Botswana government have been in a bitter dispute over more than US$277 million ( P2.9 billion) owed to Nornickel. BCL has since been dissolved into final liquidation under the watch of Nigel Dixon Warren.

Michael Marriott, Nornickel Africa’s Chief Executive, says Nornickel’s termination of the agreement means that it will no longer be requiring the BCL Group to purchase its interest in the Nkomati joint venture, of which African Rainbow Minerals owns the other 50 percent.
African Rainbow is owned by South African billionaire Patrice Motsepe. “We will continue to seek damages from BCL for the significant loss Nornickel has suffered as a result of BCL’s failure to honour its obligations. We will also continue our claim against the Government of Botswana in respect of its involvement in the reckless trading of BCL,” he said.

 Marriott further pointed out that Nornickel delivered on all its obligations to the BCL Group. “We are dismayed by their unwillingness to engage in a constructive dialogue with a foreign investor. We have made efforts in good faith to arrive at a compromise, but they have so far proved futile. Sadly, different branches of Botswana’s government and BCL’s representatives failed to agree on the approach to resolving the dispute, and in spite of the announcements by top public officials, the dispute has not been settled,” explained Nornickel boss.

Macheal Marriot said the claims Nornickel are pursuing now are aimed at recovering the significant loss the company has suffered as a result of the contract breaches by BCL and Botswana Government. He further underscored that the termination of the agreement will enable his company to pursue its own strategy for its African assets. This strategy according to Marriot entails focusing on the company’s key assets in Russia.

He said further decisions regarding Nkomati will be based on market conditions and the asset development strategy. On the other hand BCL Liquidator Nigel Dixon Warren told WeekendPost on Thursday that termination of the contract has a little or no bearing in their dealings as a company under liquidation. “We never agreed with the contract, that is why we were in dispute, we don’t agree to what they were demanding” he said.

Dixon Warren however said Nornickel‘s claim to seek damages from BCL for the significant loss it suffered as a result of BCL’s failure to honour its obligations might be given an ear by the Court of Appeal.  “We understand they will approach the court of appeal and if they win, we will then register them as creditors like any other creditor demanding a share from the company‘s assets subject to its value after liquidation is complete,” he said.



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