The new owners of Gupta’s former Optimum Coal Mine (OCM) have threatened court action should mining giants fail to grant Liberty Coal access to a lucrative coal export terminal within two weeks.
Liberty made this threat in a letter to the board of the Richards Bay Coal Terminal (RBCT).
The next stop will be a court of law if the companies, which include Glencore, Seriti, and Thungela, fail to meet Liberty’s demands within two weeks from last Wednesday.
Lawyers for Liberty Coal said in a letter to the RBCT board, dated March 6, that they rejected the ongoing shifting of goalposts in the matter, which only served to benefit the likes of Glencore, Seriti, and Thungela, all of which are shareholders in RBCT.
Tabacks Attorneys threatened legal action should Liberty Coal not be allowed to use the export terminal within two weeks.
South African mining companies ship coal to lucrative foreign markets using the RBCT terminal.
Claims for damages
Tabacks warned that if Liberty’s demands are not met, the company would, through legal means, among other things, institute claims for damages against the RBCT, its board, and/or its shareholders.
Tabacks said Liberty Coal and Liberty Coal Terminal, which should take over the export allocation of Optimum Coal Terminal, had significant concerns about accepting the alternative proposal contained in the RBCT board’s letter dated March 1, “not least that RBCT has introduced substantial uncertainty as to whether conceding to your latest demands will, given the discretion claimed by RBCT”.
The companies also questioned whether the likes of Glencore, Seriti, and Thungela were subjected to such terms and conditions.
“As canvassed during our discussion, Liberty Coal, Liberty Coal Terminal, and OCT [who will provide confirmation directly to RBCT] cannot and do not accept RBCT’s purported withdrawal of its 25 June 2021 approvals granted in respect of the ‘end-game’.”
The “end game” was an agreement between RBCT and Optimum that would allow for the resumption of coal exports, on the basis of which Liberty Coal paid RBCT up to R300-million owed by Optimum, for which the company had no liability.
Thus, said Liberty Coal, any suggestion that its financial standing required further scrutiny was spurious.
Settlement of claims
Liberty Coal, which was a R1.3-billion creditor to the Guptas, also paid R462-million to the state without admitting liability.
This was in settlement of claims that the Guptas had acquired the mine in 2016 through proceeds of crimes.
The settlement was supposed to pave the way for the mine to exit business rescue.
The agreement also meant that Liberty Coal would acquire the assets of Optimum, including the Optimum Coal Terminal.
Tabacks said in last Wednesday’s letter that its clients “consider the conduct of RBCT, the Actions and Remedies Committee, and/or its board to be oppressive and unfairly prejudicial and that the business of RBCT and/or that of its other shareholders, who are all competing coal exporters, has knowingly been conducted and continues to be conducted in a manner that is unfairly prejudicial to and oppressive of a minority shareholder”.
“As the dominant [and sole] provider of coal export terminal services via rail in South Africa, the purported decision by the board of RBCT [the majority of whose members are nominees of competing shareholders] to post-facto attempt to rescind or materially amend its previous approvals to the ‘end-game’ has the effect not only of substantially preventing or lessening competition in the market but in principle amounts to an exclusionary act as contemplated in Section 8[1][c] of the Competition Act.”
The lawyers said it was no defence for RBCT to tender access to the terminal provided OCT/Liberty Coal Terminal/Liberty Coal acceded to the range of new and egregiously onerous conditions and processes proposed by RBCT.
“It is our clients’ sincere wish that further litigation in this regard can be avoided and that this matter can be resolved amicably within the very near future.
“Our clients remain available on short notice for a further meeting with yourself, the Actions and Remedies Committee, and your legal advisors.”
Failure to meet material condition
In response, the RBCT said last Wednesday that Liberty Coal failed to meet a material condition, adding that the company’s media statement contained numerous misstatements and allegations that should be dismissed.
“The correct position is that Liberty Coal failed to meet a material suspensive condition to its indirect acquisition of the shareholders’ interest in RBCT, including the export entitlement.”
The RBCT said the condition, known to Liberty Coal since June 2021, required OCM to transfer its business and coal mines in full to Liberty Coal.
