Norilsk’s battle with BCL liquidator hots up
Tussle moves to whether the Nkomati Nickel agreement is governed by SA or English law
The legal battle between Norilsk Nickel and the liquidators of Botswana's state-owned BCL over a $300m deal has intensified, with the Russian miner's lawyers questioning the liquidator’s motives and accusing him of wasting precious cash resources.
The argument over BCL’s nonpayment of $300m for Norilsk's 50% stake in SA's Nkomati Nickel has pitted the giant Russian mining company — the world's largest palladium miner and a major source of nickel — against the Botswana government in a long-running feud over the failed deal.
The liquidators argue that the agreement with Norilsk is void because BCL was in dire financial difficulties by the time SA's department of mineral resources considered and then granted a transfer of mining rights from Norilsk to a broke BCL subsidiary. This violated the Mineral and Petroleum Resources Development Act and should be cancelled, by extension terminating the deal with Norilsk and the need to pay the Russian miner $300m.
In terms of the act, the applicants for the transfer of a mining right, commonly known in SA's mining industry as a section 11 transfer, 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 its latest interaction with the BCL liquidator, Norilsk accused 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.
Norilsk said the agreement was drawn up under English law, which meant that even if such a transfer was subsequently overturned or reversed, the terms of the agreement had still been met and the liquidator had to pay over the $300m.
Norilsk's lawyers, Herbert Smith Freehills, said the terms of the contract BCL and its subsidiary signed with Norilsk in 2014 were fully met when the transfer of the Nkomati stake was approved by the department in 2016.
The London division of the law firm said BCL had fully participated in the mineral rights transfer application and the talks with the department to secure its consent. BCL was “taking steps to undermine that consent in breach of contract”.
"Ultimately, however, the question of whether the conditions to the SPA [sale and purchase agreement] were fulfilled is to be determined by applying English law contractual principles. The SA courts cannot adjudicate this matter," the firm said.
Bookbinder Business Law, representing Dixon-Warren, rejected the assertion out of hand. “Both as a matter of contract and statute the SPA is unenforceable,” the Botswana law firm said.
Norilsk had submitted a “defective” mineral rights transfer application “knowing full well that the BCL companies did not possess the resources [technical or financial] to satisfy the requirements of the ... act,” it said.
“In the circumstances, your clients’ attempt to rely on and enforce the section 11 consent is duplicitous and will be seen as such by any SA court/the minister,” it added.
The department, under the new leadership of Mantashe, has said it will give attention to the appeal lodged by Dixon-Warren ahead of the matter being heard in court where papers have already been lodged.