Supplier applies to court for liquidation of Nkomati Anthracite

Written by Ciaran Ryan. Posted in Journalism

Bumbana Mining says it’s owed R32m by the firm, which is part of JSE-listed Unicorn Capital Partners. From Moneyweb.

Image: Shutterstock

Contractor Bumbana Mining is asking the Pretoria High Court for the winding up of Nkomati Anthracite, after failure to receive roughly R32 million in contractor fees – which includes interest, dating back to 2016.

Nkomati Anthracite is part of the JSE-listed Unicorn Capital Partners. According to Unicorn’s financial statements, the anthracite operations account for about 20% of group revenue. Bumbana was formed specifically for the project with Nkomati.

Bumbana Director Pieter Tenner says in a court affidavit that the company provided mining operations at Nkomati’s Mbombela mine from February 2016 to May 2017. 

Nkomati started experiencing financial difficulties during the early part of 2017 and Bumbana was refused an increase in its contract mining rate when it came to negotiation time.

Invoices that were supposed to be paid within seven days were bumped out to 30 days in keeping the payment terms of the ultimate recipient of the anthracite, Glencore, which had increased Nkomati’s rate per tonne by 22%, according to Tenner’s affidavit.

“The real reason for the refusal to give applicant (Bumbana) an increase in the rate, as well as the attempt to change the payment terms, were simply because the respondent was already at that stage experiencing extreme financial difficulties,” Tenner stated.

Payment delays started in March 2017 and were aggravated by disputes over contract rates and supplies. Bumbana says it ended up carrying Nkomati financially and could no longer carry on.

On May 31, 2017 it started vacating the site, claiming R27.3 million in outstanding invoices.

In June 2017, Nkomati claimed in a letter that it had suffered damages of R13.5 million due to Bumbana not meeting production targets, and a further R51 million due to mine rehabilitations obligations. This was the first indication of any concerns over production targets.

The matter then went to arbitration, chaired by Advocate Danie Dörfling SC.

There were several months’ more delays and when Nkomati finally presented its pleadings, it claimed Bumbana had failed to comply with the contract; its invoices were incorrect; and it had flouted various laws and failed to mine efficiently and with the required resources.

Ultimately, Nkomati narrowed its defences to two issues: Bumbana had failed to achieve a production target of 40 000 tonnes a month so payment was not due; and the invoices did not display the right VAT number. Nkomati then counterclaimed for about R66 million.

During the arbitration proceedings, Nkomati’s case reportedly collapsed, according to Tenner. Its witnesses were found to be untruthful and the counterclaim “died a slow death”.

The arbitrator found against Nkomati on the grounds that there was no contractual obligation to produce 40 000 tonnes a month. The arbitration award was handed down in February 2019 and Nkomati appealed. “Once again, it was clear that (Nkomati) was busy with delaying tactics.” The appeal was dismissed with costs against Nkomati.

Bumbana then applied to have the arbitration award made an order of court and was met with a counter-application from Nkomati to freeze proceedings.

Tenner says this is a further attempt by Nkomati to delay the inevitable day of reckoning. Nkomati had allegedly offered to pay the outstanding amount in instalments, as it was unable to pay in one go. Discussions broke down and no resolution was reached.

Tenner’s affidavit also alleged that Unicorn intended to list Nkomati on the JSE or sell it to a third party. The listing idea was announced in Unicorn’s 2019 annual report.

The affidavit also references ongoing litigation with other companies in the same annual report, though no mention is made of the claim by Bumbana.

When contacted for comment, Unicorn CEO Jacques Badenhorst said Bumbana’s claim had been included in its financial statements as an ordinary creditor. He also said the matter would be defended, notwithstanding the arbitrator’s ruling.

Ciaran Ryan

The Writer's Room is a curated by Ciaran Ryan, who has written on South African affairs for Sunday Times, Mail & Guardian, Financial Mail, Finweek, Noseweek, The Daily Telegraph, Forbes, USA Today, Acts Online and Lewrockwell.com, among others. In between he manages a gold mining operation in Ghana, and previously worked in Congo. Most of his time is spent in the lovely city of Joburg.