Norilsk Nickel endager BCL deal

• BCL dispute remains under arbitration in London
• Botswana fails to honour settlement with Norilsk
• ‘Norilsk knows nothing about BCL sale to PNRB. We have not received any formal request for new settlement’ -Norilsk
• PNRB in the lurch as Govt plays Russian roulette

OARABILE MOSIKARE

editors@thepatriot.co.bw

An unresolved dispute between Botswana Government and Russian mining giant Norilsk Nickel over the liquidation of BCL Group, could hamper ambitious plans by Premium Nickel Resources Botswana (PNRB) to acquire and resuscitate parts of the Selibe Phikwe mine.

Investigations by The Patriot on Sunday has unearthed information showing that the dispute over the initial agreement for the sale of Norilsk Nickel’s interest in Nkomati mine to BCL Group is currently alive before the London Court of International Arbitration (LCIA). The dispute between the parties emanated from a 2014 deal in which Norilsk struck two agreements with BCL Limited to sell its 85 percent stake in Tati Nickel Mine and its 50 percent stake in South Africa’s Nkomati Nickel to the state-run nickel producer for US$337 million (about P3, 815, 343, 698.70). The price was later reduced to US$227 million (about P2, 569, 975, 999.54). According to the Russian mining giant the agreements became unconditional in September 2016 and the BCL Group failed to perform its obligations. In October 2016, the Botswana Government closed the BCL mine and its subsidiaries, and  placed the entities under provisional liquidation.

Norilsk then filed a reckless trading claim against Botswana Government -BCL’s sole shareholder, seeking a declaration that it is responsible for the liabilities of the BCL entities. The dispute reached the apex court in Botswana, and the Court of Appeal in 2019 concluded that a denial of permission for LCIA proceedings would have resulted in serious injustice as it would have prevented Nornickel ever proving its claims. According the judgment, the LCIA will have to determine whether all conditions precedent to the transaction had been fulfilled and to assess the damages to be paid by the BCL Group to Norilsk.

Last month, PNRB announced that it has executed a definitive asset purchase agreement with the liquidator of BCL Limited to acquire the Selebi, and Selebi North (together with Selebi assets) nickel-copper-cobalt assets and related infrastructure formerly operated by BCL. Led by Montwedi Mphathi, PNRB said it is targeting the closing of the transaction, and transfer of ownership of the assets, within 120 days. It is also negotiating a separate asset purchase agreement to finalise terms for any prioritized Tati Nickel Mining Company assets that may be purchased.

Observers said the PNRB deal might fall through if Botswana Government and Norilsk do not resolve their dispute before the LCIA. Although the Minister of Mineral Resources, Green Technology and Energy Security (MRGTES), Lefoko Moagi claimed that there has been a settlement between Botswana Government and the Russians, Norilsk is adamant that there is no such.

In an exclusive interview with The Patriot on Sunday, Sulanji Siwale in his capacity as Norilsk advisor, said the BCL-Norilsk Nickel dispute remains before London Arbitration. He revealed that Norilsk Nickel has not received any communication from the Botswana Government regarding their commitment or willingness to implement the settlement after the Botswana Court of Appeal ruled that the matter should go to London Arbitration. “Should the Botswana Government be willing to implement the settlement agreement as approved by the Botswana Parliament in 2018, then they should officially confirm that in writing to Norilsk Nickel. Norilsk Nickel has previously confirmed in writing its willingness to fulfill its obligations as per the settlement terms previously agreed with the Botswana Government,” said Siwale.

With Norilsk Nickel being a listed company -on the Moscow and Saint-Petersburg Stock Exchanges, any settlement would have to be announced to the stock exchange publicly and there has been no such development so far. Reached for comment last week Tuesday, Moagi said there has been a settlement but could not share details, but instead referred enquiries to Deputy Permanent Secretary, Johannes Tsimako. Tsimako did not respond to questions sent to him.

BCL liquidator vs Russians

Although the Court of Appeal reprimanded the former BCL liquidator Nigel Dixon-Warren for delaying winding up of the BCL Mine it is clear that the new liquidator might also be playing delaying tactics instead of implementing the settlement agreement. Sources close to the deal concur that the obstacles to conclude the settlement have come from liquidators rather than the government. They base their inferences from correspondences exchanged between the liquidators and Norilsk representatives.

In the Court of Appeal judgment, it was noted that Dixon-Warren has made it clear from the outset and on numerous occasions that he will fight the appellant’s claim every step of the way. The Court said this involved every possible technical point available and even embarking on litigation to set aside the Minister’s approval of the transaction aside. The Judge also added that the winding-up process of the BCL Group has already taken more than a year with little progress.

In one letter in January 2020 Trevor Glaum who took over from Dixon-Warren as BCL liquidator wrote to Siwale said they were not aware of the proposed settlement. Glaum then told Norilsk that should they wish to make any settlement proposals to the liquidators they should approach them directly or through their legal representatives Bookbinder Business Law. This was surprising coming from Glaum since the new liquidators inherited legal representatives Bookbinder Business Law from Dixon-Warren. This also came as a surprise to Norilsk since they have never indicated that they would like to re-negotiate the settlement agreement.

The Patriot on Sunday is reliably informed that Norilsk is and always has been committed to implement the terms and conditions of the negotiated settlement. The settlement was approved by the Norilsk, Minerals Development Company Botswana (MDCB) and the Government of Botswana (including the Botswana Parliament).

“The liquidator refused to abide by the terms of the settlement. Therefore, the terms of settlement have already been negotiated and agreed, they just need to be implemented by all parties,” said a source privy to the contentious issue. It is said that Norilsk will implement the agreed settlement if there is commitment to do so by all parties. The early 2020 correspondences were the last official ones before the COVID-19 pandemic began.