/ 27 March 2009

Pamodzi Gold tarnishes

Power utility Eskom has given cash-strapped Pamodzi Gold until next week Tuesday to settle its electricity bills amounting millions of rands to avoid power cuts in all its four operations, the Mail & Guardian has established.

Eskom’s ultimatum comes a week after the North Gauteng High Court granted a provisional liquidation order against Pamodzi Gold after the company failed to pay labour broker Engineering Lobour Hire, which is owed R22-million by Pamodzi, for supplying mineworkers to its Orkney operation.

Industry sources told the M&G this week that Pamodzi Gold, a black economic empowerment company, owed Eskom over R100-million in unpaid electricity bills. This is in addition to many other creditors, including Anglo Gold Ashanti, Harmony Gold and several municipalities, which are owed hundreds of millions of rands by Pamodzi.

Eskom spokesman Fani Zulu refused to comment on Pamodzi’s debts to Eskom, saying it was against the company’s policy to discuss or divulge privileged customer information.

Kolekile Sipunzi, National Union of Mineworkers (NUM) regional secretary in Free State, told the M&G that Pamodzi owed R6-million to Sedibeng Water. Harmony confirmed that Pamodzi owed them about R130-million.

Anglo Gold spokeswoman Joanne Jones said her company, which is one of Pamodzi’s largest creditors, was considering legal action against Pamodzi. Anglo Gold Ashanti provide domestic waste removal and refine gold products for Pamodzi.

Business Times reported last week that Pamodzi needed more than R400-million loan to keep going.

The company secured R200-million from the Industrial Development Corporation (IDC) and another R200-million from a company called Best Rock, which has since reneged on the deal.

Due to the time delay in securing the Best Rock funding, Pamodzi Gold now needs R400-million over and above the IDC funding.

The company has been battling to raise money to pay its employees and some operational costs over the past few months. It has also failed to pay Rent Mutual Insurance, which cover workers for injuries at work, since June last year.

Eskom power cuts at Pamodzi’s operations would force the company to close shops, which would result in 12 000 workers losing their jobs. Mining companies need electricity for pumping and cooling underground. Without electricity there would be flooding, which would result in health hazard for neighbouring communities.

Bheki Khumalo, communication boss at the Department of Minerals and Energy, confirmed Eskom’s ultimatum to Pamodzi but warned that the power utility’s decision to cut electricity at Pamodzi would result in serious environmental consequences.

Khumalo said Pamodzi had written a letter to his department asking for its intervention. However, Khumalo said there was little that the department could do as the matter was between Eskom and Pamodzi.

The department had given Pamodzi thousands of millions of rands for water pumping at its various operations over the past years, Khumalo said.

NUM general secretary Frans Baleni blamed Pamodzi management for the company’s financial woes. “We saw it coming. We put the blame on management for not taking decisive action when they realised that they were going down. How do they [the management] go for a loan on something that could not deliver? For them not to detect that Best Rock would not be able to live up to its commitments is mind-boggling. They miscalculated the whole thing.”

He said his union has filed papers in the Northern Gauteng High Court asking the Master of the Court for permission to appoint its own liquidator in addition to the other three liquidators involved in Pamodzi liquidation.

“We want our own liquidator to push for workers’ interests. The company also owes our members millions of rands. We want to ensure that all benefits due to our members are paid accordingly,” said Baleni.

Pamodzi Gold chief executive Peter Steenkamp was unavailable for comment.