Guptas and Zwane ‘drove Glencore to sell colliery’ at Switzerland meeting
Details have emerged for the first time of a two-day visit
in 2015 to Glencore CEO Ivan Glasenberg in Switzerland
by then mineral resources minister Mosebenzi Zwane that saw the company make a U-turn on its decision to keep the Optimum colliery.
Glencore was on Wednesday the first mining company to give evidence at the commission of inquiry into state capture.
The miner and trader featured prominently in former public protector Thuli Madonsela’s 2016 State of Capture report as an example of how the Gupta family, along with state-owned enterprises, manipulated events to their benefit.
Outlining the events leading to the virtual collapse of the Optimum colliery, which had supplied Eskom’s Hendrina power plant in Mpumalanga for more than 40 years, former CEO of Glencore Coal SA Clinton Ephron said long-running efforts to keep the mine in production had run foul of new management at Eskom.
The power utility imposed significant fines on Optimum for delivering substandard coal and refused to renegotiate a supply contract that could return the mine to profitability, forcing the operation into business rescue.
After the purchase by the Guptas, Eskom, which provided funding for the transaction in the form of a "prepayment" for coal deliveries, waived the fines and renegotiated the Optimum contract.
While much of Ephron’s heavily lawyered testimony was similar to details in Madonsela’s report, the item of real interest came right at the end of a full day on the stand, when he detailed the two-day visit by Zwane, Tony Gupta and other Gupta lieutenants to Glasenberg in December 2015.
According to Ephron, Zwane’s office phoned Glencore’s head office in Switzerland at the end of November 2015 to set up a meeting between the minister and Glasenberg, the commodity trader’s tough SA-born CEO.
That meeting would come after two offers from the Guptas were rejected, and took place just days after the November 29 internal meeting at Glencore where it was decided to "continue funding Optimum", taking the loss-making mine out of business rescue. The decision was communicated to Eskom on the same day.
Just days later, two meetings were held in the Dolder hotel in Zurich, on December 1 and 2. The first meeting was attended by Zwane and Salim Essa, another Gupta lieutenant, who was described to Glasenberg as an adviser to the minister.
While Glasenberg tried to raise his concerns about the spate of safety stoppages suddenly ordered at Glencore’s SA mines, Zwane said he would prefer to talk about Optimum, Ephron said in his testimony, relying on feedback he received from the Glencore boss.
Ephron was ordered to fly to Switzerland overnight for the second meeting with Zwane and the Gupta delegation.
Glasenberg told Zwane Glencore would fund Optimum to bring it out of business rescue and continue supplying coal to Eskom, but "Glencore would be open to a sale at an appropriate price as long as it was acceptable to the business rescue practitioners", Ephron said.
At the second meeting attended by Zwane, Gupta, Essa, Glasenberg and Ephron, the minister opened the meeting by expressing his concern about continued employment at the mine and that it should not go into liquidation.
"[Zwane said] the best outcome would be if Glencore and Oakbay were to reach a deal," Ephron said.
Zwane left the meeting, and Gupta and Glasenberg discussed the sale of the Optimum colliery and its related assets, and a price of R2.15bn was agreed on, he said.