Optimum Coal’s relaunch halted by dispute over Richards Bay export entitlement

This week’s planned relaunch of Optimum Coal under new owner Liberty Coal after six years in business rescue has been put on hold pending resolution of a dispute over its export entitlement through the Richards Bay Coal Terminal (RBCT).

“It is unfortunate that Liberty Coal’s competitors wish to delay any access to the crucial port allocation at RBCT historically held by OCT [Optimum Coal Terminal], whilst imposing unreasonable conditions on Liberty Coal which can only be described as unfair, anti-competitive and/or oppressive,” says Liberty Coal in a statement.

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Read: Optimum Coal to exit business rescue after six agonising years

The competitors being referred to here include the country’s largest coal producers and exporters – Seriti, Thungela and Glencore, all of which are shareholders in RBCT.

The ongoing dispute means competitors are profiting from their use of the allocated rail and port facilities that should now be available to Liberty Coal, says the company.

Optimum, once the most prized trophy in the Gupta portfolio of assets, is in the process of exiting business rescue following a successful bid for the mine assets and liabilities by Liberty Coal, controlled by British businessman and former Gupta associate Daniel McGowan.

Read: Optimum Coal Mine was paid for with criminal funds

Liberty says the mine’s profitability and operations are dependent on its ability to export coal. Without that, Optimum is a “white elephant” and the business rescue plan is doomed to fail, according to Liberty Coal director Ulrich Bester in a court affidavit filed in one of the many cases that have hobbled the group’s rescue.

Read: Court dismisses Optimum Coal’s case for Richards Bay Coal Terminal access

Liberty Coal is a subsidiary of McGowan’s Templar Capital, which is the single largest creditor in OCM, having acquired its R1.3 billion claim via a cession of another company in which McGowan is director, Centaur Ventures.

RBCT has been in dispute with Optimum Coal over several instances of default relating to unpaid wharfage fees, which were subsequently settled.

RBCT suspended Optimum’s export entitlement while forfeiture proceedings were underway.

Agreement

In 2022, the National Director of Public Prosecutions (NDPP) brought two applications for the forfeiture of all shares in the Optimum Coal Mine (OCM) and Optimum Coal Terminal (OCT) at Richards Bay by Tegeta, the Guptas’ holding company.

The NDPP was also seeking forfeiture of Templar Capital’s R1.3 billion claim against OCM.

As Moneyweb previously reported, Liberty agreed to pay R461.7 million to the state, without admitting liability, in settlement of these claims. This was supposed to pave the way for the mine to exit business rescue.

Liberty or associated companies have paid close to R300 million to RBCT on behalf of Optimum Coal.

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It says this was a commitment it was willing to take on, though it had no legal obligation to do so, providing RBCT uplifted OCT’s suspension.

This was part of a so-called “end game” agreement between RBCT and Optimum that would allow for the resumption of coal exports.

Job losses

Since RBCT suspended OCT’s export entitlement, 1,208 jobs have been lost at Optimum Coal Mine, with more than 300 of these coming in the last two months.

Read: Optimum Coal workers go unpaid as rescue practitioners race to sell mine

Some 720 (of the remaining 1,641) staff are employed by Optimum’s coal contractor Salaria, which is being paid to mine and stockpile coal that cannot be exported.

Optimum says it currently has about one million tons of coal stockpiled.

“Unless and until the RBCT issue is resolved, the future of the Optimum Mine is unknown and perilous,” says Liberty.

“The 1 208 individuals who have already lost their jobs will not be able to be re-employed and the jobs of the remaining 1 641 employees are at imminent risk.

“It is unfortunate that Liberty Coal’s competitors wish to delay any access to the crucial port allocation at RBCT historically held by OCT, whilst imposing unreasonable conditions on Liberty Coal which can only be described as unfair, anti-competitive and/or oppressive.”

The conditions being imposed on Liberty by RBCT appear at odds with previous RBCT board approvals as part of the OCT business rescue plan, according to Liberty.

Moneyweb reached out to RBCT for comment but had not received a reply by the time of publication.

William Murphy

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