Hope dies at Guptas’ Optimum mine
As the business rescue process drags on, workers have gone months without being paid, and despite promises of relief on February 28, some remain sceptical
There is an unusual flurry of activity at Christo Mostert’s modest home in the otherwise ghostly quiet suburb of Koornfontein in Blinkpan, in the midst of the Mpumalanga coal fields. The people gathered there pray, before lining up to collect their parcels. The bag of maize meal, some potatoes, cereals and other basics will tide them over for a short while. It’s a more orderly scene than two weeks earlier, when 123 people arrived at the house. Fortunately, a last-minute maize meal donation meant no-one had to leave empty-handed.
The destitute workers of Optimum Coal last received a pay cheque in October, and it’s thanks to the work of Mostert and other community members, who recently formed a nonprofit organisation called Feed the Miner, that they are able to get by.
One employee, who like her colleagues asks not to be named, says she received a parcel last time. "If it wasn’t for that … " she trails off. "I’m sitting out this week. I would like to get next time, but then they need to give to people who haven’t received yet. It’s snowballing now."
Volunteer Zonica Mostert, Christo Mostert’s daughter-in-law, says handouts are done every second week; there is not enough to do it weekly.
It was in November that Optimum’s workers first realised they would not be paid. Then, on December 3, they were instructed to stay at home while the already long-delayed business rescue process dragged on.
Including contractors, the affected workforce totals 7,000, and the surrounding communities of Koornfontein, Komati and Hendrina are feeling the effect.
Local shops, already struggling to keep their doors open, are in no position to help with donations. "They are in the same boat as everyone else," Zonica Mostert says.
A Christmas without presents was hard on the children, but the first day of school, without new clothes or stationery, was worse.
The employees are at the end of their tether. One describes the start to the year as "misery". Transporting his children to school and paying the fees came at the cost of his pregnant wife’s check-up at the gynaecologist. "The medical aid is suspended. She’s going to give birth in March and Mediclinic needs a lot of cash," he says. "If the situation goes on like this, I don’t know what is going to happen."
Another employee tells of a video a colleague recently posted: "She was sitting at the dam with a beer — and she’s not a drinker — thinking of suicide."
We knew the mine would run out of cash … we were hoping a successful bidder would be voted inLouis Klopper
The mineworkers are also torn on who to blame for their situation: the business rescue practitioners or embattled power utility Eskom.
The sale of Optimum Coal — which consists of the Optimum and Koornfontein coal mines, as well as their coal export allocations at the Richards Bay Coal Terminal, considered the prize asset — was a central focus of former public protector Thuli Madonsela’s "State of Capture" report. It showed how Eskom, SA’s largest state-owned company, essentially forced Glencore to sell the operation in 2016.
Eskom then helped Tegeta Exploration & Resources, owned by the Gupta family, to acquire it in a sweetheart deal — ultimately at SA taxpayers’ expense.
But in the years that followed, the Gupta empire unravelled under immense pressure from civil society. In February last year, when Gupta-linked businesses were completely cut off from banking facilities, they were unable to operate and were placed in business rescue. Optimum was among them.
Business rescue is a provision of the Companies Act that allows for the rehabilitation of financially distressed entities. The process is meant to rehabilitate the company as quickly as possible and is designed to take three months.
However, Optimum’s rescue has faced numerous delays, not least of which were 44 court challenges brought against the rescue practitioners, all of them unsuccessful.
Now, just as the legal hurdles appear to have been cleared, it is the largest creditor, Eskom, that looks to be holding the rescue back.
"We saw this coming. That’s why we had a creditors’ meeting at the end of November," says Optimum business rescue practitioner Louis Klopper. "We knew the mine would run out of cash at that time and we were hoping a successful bidder would be voted in."
Klopper says huge amounts of cash are needed to run Optimum’s operations, and various factors conspired to halt production at the mine — including "belligerence" from the contractor Westdawn Investments, which does business as JIC Mining Service and is a Gupta-linked company.
The business rescue plan centres on the urgent sale of Optimum’s assets, but Eskom asked for the November creditors’ meeting to be postponed. The utility is meeting bidders and wants to lock down a long-term coal supply agreement with the new owner, whoever that may be.
Eskom is facing a coal supply crisis at a number of power stations. At its Hendrina power station, supply from the Optimum colliery right next door halted when the company went into rescue. It was more lucrative to get cash into the distressed business by selling the coal to the export market than to Eskom. In any case, Eskom’s supply agreement with the Guptas has now come to an end.
Then there is the question of the R2bn penalty Eskom originally levied on Glencore — and which forced the sale in 2016. It was reduced to R225m upon the sale of assets to Tegeta, but Eskom is reportedly still hoping to claw back some of the balance.
As Eskom holds more than 50% of the creditors’ votes, it must be on board for any potential sale to go through.
Late last year there appeared to be only one suitable bid, from a consortium calling itself Project Halo. It was so confident of sealing the deal that it put out a statement to announce it had submitted the R3.05bn "winning bid" — only to learn through the media that the process had been reopened to receive new bids.
Two more contenders have since entered the fray, one of which is state-owned mining company African Exploration Mining & Finance Corp. The other is the Phakamani consortium, of which mining stalwart Bernard Swanepoel is a member. It has reportedly resubmitted a bid at the request of the rescue practitioners
What it means
Optimum workers are in limbo as the rescue process drags on
"I think the problem we’ve got is with the business rescue people," says one employee. "If there’s a cut-off date, why do they open it again? Why? We ask the questions but we don’t get answers."
But Klopper says the rescue process has been so volatile over the past 11 months that the practitioners foresaw the possibility that last-minute bids could come in. "The [Companies] Act requires us at all times to put the best solution before the creditors. To stop any late bids from coming in means we are not allowing for the best possible solution."
In a letter circulated to the workers, the practitioners have now promised payment on February 28.
But Klopper and his colleagues are waiting for feedback from Eskom before they can make a new rescue plan available to creditors. Once it’s released, creditors could vote on the plan after five days, and the new owner could transfer funds into the business immediately after that. After being voted in, a new owner could immediately put R600m into the business and salaries would be paid.
Some are holding out hope that, this time, the promise of payment will be kept. "We really need to go back to work," says one employee.
Others don’t have faith in the process any more. "Honestly," says one woman, "I’m telling you, we are not going to get paid on February 28."
Eskom did not respond to requests for comment.
On Wednesday a rescue operation was launched at the Gloria mine — one of the Koornfontein operations — after 22 people believed to be trying to steal cables were trapped underground when there was a gas explosion.