Norilsk seeks damages from Botswana govt over stalled sale of Nkomati, Tati mines

JOHANNESBURG (miningweekly.com) – Norilsk Nickel will start legal proceedings against the Botswana government in relation to a stalled 2014 deal that would have resulted in Botswana copper and nickel producer BCL Mine acquiring Norilsk’s African assets.

In October 2014, BCL agreed to buy Norilsk’s 50% interest in the Nkomati mine, in South Africa, and its 85% interest, in the Tati mine, in Botswana, for $337-million.

In view of the global metals environment, Norilsk, in late 2015, agreed to make a number of price concessions related to the deal, lowering the purchase price; however, despite the transaction having received regulatory approvals and becoming unconditional in September 2016, Norilsk says BCL has not closed the transaction.

Further, Norilsk said it had learned through the media in October 2016 that BCL had been placed into provisional liquidation by the Botswana government.

In December, Norilsk had filed legal claims against BCL in the Botswana courts, as well as in the London Court of International Arbitration, to recover $271.3-million, plus costs, in relation to the stalled transaction.

It will now pursue a court order to hold the Botswana government responsible for paying all liabilities due to Norilsk by BCL under the sales agreement.

It aims to recover $271-million in relation to the sale of the Nkomati mine and $6.4-million in relation to the sale of the Tati mine.

“Government approved all material decisions relating to this transaction,” Norilsk Nickel Africa CEO Michael Marriott said in a statement on Friday.

He added that BCL had always historically relied on financial support from government to survive and, in view of BCL’s financial position, it was clear that most, if not all the funding, for the Nkomati deal would have to come from or be guaranteed by the government.

He noted that the Botswana government had been aware of BCL's financial situation throughout, and should have known that there was no reasonable prospect of it being able to pay the amounts due to Norilsk without government’s support.
“Norilsk has been left with little option but to pursue a resolution through legal channels. In its claim against government, Norilsk asserts that the business of BCL has been carried on recklessly and that government was party to that recklessness,” said Marriott.