Minister Zwane has some explaining to do
2 February 2016
Mineral Resources Minister Mosebenzi Zwane needs to explain his involvement with the Guptas’ deal to buy the Optimum coal mine. The suite of deals has seen the Guptas grabbing coal deals from Eskom worth billions and has potentially put hundreds of jobs at risk.
Zwane’s involvement is not in dispute. Zwane himself admitted that he travelled to Switzerland with the Guptas to help push through the deal to buy the mine from Glencore. He claims that his aim was to save mining jobs. Though this is an admirable purported goal, the trip was, at best, unwise for a Minister trying to prove to the mining industry that he is even-handed and unbiased, given Zwane’s previous close association with the Guptas. At worst, it shows that the Minister as committed strictly to the interests of the Gupta family and other Zuma allies instead of the good of the mining industries and its workers.
The mounting evidence is beginning to suggest the latter conclusion.
It has been revealed that the Optimum mine, now owned by the Gupta family’s Tengeta Resources, is supplying coal not only to Eskom’s Hendrina power station, but also to the Arnot power station. It must be remembered that this is the same mine that Eskom claimed produced coal of such poor quality that it slapped previous owner, Swiss firm Glencore, with a fine of R2.5 billion. Eskom also refused to renegotiate a deal with the mine when it was owned by Glencore.
Such a deal could have saved hundreds of jobs. Now that the distressed mine has been scooped up by the Guptas for a fraction of its value, Eskom is suddenly prepared to do business with Optimum again. It is also being reported that the R2.5 billion fine has been taken care of, the Minister having brokered a deal to have the fine written off, provided Glencore sell the mine to the Guptas at a significantly reduced price. Furthermore, Eskom has cancelled contracts with BEE-owned miner Exxaro in favour of the Gupta’s Optimum, potentially putting hundreds more jobs at risk.
The entire deal seems tainted with corruption and Minister Zwane is too close to it to avoid this taint. Minister Zwane needs to tell South Africa whether he negotiated Tengeta’s let-off from the fine while in Switzerland. If he says he did not do so, then he needs to tell us exactly what he did negotiate and the extent of his involvement in this job-culling deal.
The evidence currently suggests that Zwane and Eskom contrived to make Optimum unviable for Glencore to operate. Once Glencore was forced to sell the mine to the Guptas, it was then arranged that the path for Tengeta would be eased to get supply contracts with Eskom and get let off a considerable fine.
It is undeniable that there was either a good reason for the fine, or it was merely a device to drive Glencore out of the business. Either way, only the Guptas and their allies have benefitted from these transactions. The potential and actual job losses associated with this deal seem only incidental to the Minister.
Sadly, the Minister’s conduct is just yet another nail in the coffin of investor confidence in the mining industry. Corruption and partiality to Zuma pals by Ministers like Zwane is scaring off job-creating investment. The Minister and his President’s government must explain to South Africa how they were really involved in this Gupta scheme.
Issued by James Lorimer, DA Shadow Minister of Mineral Resources, 2 February 2016
