Wisani wa ka Ngobeni
A row has erupted between the state-owned Eskom Enterprises and a black empowerment mining group over the parastatal’s decision to award a lucrative marketing contract to an international coal firm without following government tender regulations.
The Mail & Guardian is in possession of documents exchanged between Eskom Enterprises, the unregulated arm of the state electricity company Eskom, and Zebeza Mining, one of South Africa’s most successful black-owned mining companies.
At the centre of the dispute is Zebeza’s charge that Eskom Enterprises, through its subsidiary company Golang Coal, gave Anker, a Holland-based coal mining company, a three-year multimillion-rand marketing contract without placing it on open tender.
Anker was awarded the contract in 2000 but the Golang project, which involves a combined mining operation in Ermelo, Mpumalanga, is set to kick-off in the next 18 months.
In a letter to Minister of Public Enterprises Jeff Radebe, Zebeza mining director Peter Davidson described Eskom Enterprises’ decision to award Anker the marketing deal as “flagrant bias and discrimination”.
Davidson said Zebeza approached Eskom Enterprises last year in an attempt to be appointed alongside Anker as a black empowerment partner, but was turned down. The company also proposed that Eskom Enterprises consider it for a mining contract in the Golang project, but was told it would have to tender for it.
“We find it discriminatory and unfair to submit one party to a tender process and to appoint another and then justify this action by claiming that marketing is a scarce resource,” Davidson said.
Eskom had appointed Zebeza in the past in another project, the Matla 5 seam mining project, to conduct its export marketing.
Golang is a joint venture between Eskom Enterprises (67,7%) and Anker (33,3%). Anker has offered to sell half of its shares in Golang to Zebeza. Negotiations are under way between the two companies. According to the deal, Zebeza would go into a joint venture with Anker to form a company called Shosholoza.
Shosholoza would buy 50% of Golang, leaving Eskom Enterprises with the rest. Eskom Enterprises would then sell half of its shares to other black empowerment companies, which will have to go through a tender process.
Eventually Eskom Enterprises would relinquish all its shares in Golang, which was established to mine combined coal reserves and export via Richards Bay. Zebeza was hoping to get a service provision contract with Golang in order to fund its stake in Shosholoza.
Zebeza, which employs more than 390 workers, holds a R180-million mining and management contract in the Goldview mine, near Ermelo. The mine is wholly owned by Anker.
Zebeza says because of its involvement in Goldview and the offer of shareholder status in Golang, it was best placed to be given a mining contract in Golang. But Eskom Enterprises insist this will only be through a tender process. Golang will operate over the next 20 years. The project has successfully negotiated a three million ton a year export allocation via South Dunes Coal Terminal.
Golang director Franois Badenhorst said Anker approached Eskom Enterprises in 1998 with the proposal to form the project.
He said Anker’s appointment as a marketing agent for Golang was included in the proposal, and that the proposal and the involvement of Anker as shareholder and marketing agent was approved by the government in October 2000.
On the lack of a black empowerment component in the Anker deal, Badenhorst said that to his company’s knowledge no black economic empowerment company capable of marketing international coal sales existed at that time [1998].
He said the awarding of the contract to Anker, as a shareholder of Golang, “will be an incentive to maximise value”.
Zebeza, however, shot this assertion down. The company argued that if Eskom Enterprises had failed to find a locally based company capable of carrying out the marketing work it could, at least, have brought in an empowerment partner to work alongside Anker.
Davidson said his company approached Eskom Enterprise executive director Solly Moloko in February with the proposal to work with Anker, but was turned down.
In a letter to Moloko, Davidson says a joint appointment with Anker would not only facilitate the transfer of skills, would ensure that part of the foreign exchange derived from the activity flows back to South Africa.
In his response, Moloko said his company had made a commitment to Anker, but promised to raise the issue with Golang’s board. Golang’s directors are Badenhorst, Gijaan Rottier and Leonard Smith.
According to Badenhorst, Eskom Enterprises has no option but to honour its contract with Anker. He said Golang’s viability is dependent on Anker’s involvement, given its “massive reserves”.
He conceded, however, that Golang, as a subsidiary of Eskom Enterprises, was bound by the Public Finance Management Act, which promotes transparent commercial practices.
In general, Badenhorst said, “we place contracts in an open tender”. He said the Anker deal was a “special case” and there was “no way we could put it on tender”.
“It depends what it is. In this case [of the Anker deal] there is no company in South Africa that can do the work. The [South African] companies that can do the marketing work are our competitors. Maybe after the Anker deal expires there will be black economic companies available to do this work, but I do not think so,” he said.
Moloko said: “After the expiry date of the Anker contract we will put the marketing contract on tender and everybody will be welcome to participate”.
But Zebeza is not satisfied. “We believe that it is Eskom’s policy and that of the South African government to support and deepen [black] empowerment. In the interest of fair play, we believe that we [Zebeza] should be accorded the same privilege [as Anker].”