The R2,15 billion acquisition deal was announced in February this year after reports surfaced that Mineral Resources Minister Mosebenzi Zwane had travelled to Switzerland with a Gupta delegation to negotiate the deal with Glencore’s CEO, Ivan Glasenberg.
The deal was recently approved by the Competition Tribunal with conditions, and will see Zuma – who owns a bigger share percentage than any of the Gupta brothers and their wives – rake in millions from the agreement through multiple multibillion-rand tenders to supply coal to three power plants: the Hendrina, with 5,5 million tons of coal a year at a cost of R150 a ton, the Komati and Majuba power stations.
Under Glencore’s ownership, Optimum coal mine used to supply Eskom with millions of tons of coal below cost, but the contract wasn’t renegotiated last year. The company was later fined more than R2 billion for supplying sub-standard coal. This sent the business into business rescue, leaving it ripe for an acquisition bid, Bloomberg reported.
Optimum has also secured a short-term contract to supply the Arnot power station with coal for more than R400 a ton.
Last year, the Sunday Times reported that Eskom had taken “extraordinary lengths” to ensure that a R4 billion coal supply contract was awarded to the Gupta family via Tegeta.
Bloomberg reports that on 20 November last year about half the shares in Tegeta, previously controlled solely by the Gupta family and employees, were transferred to Mabengela Investments (28,5%), a company partly owned by Zuma, as well as a company known as Elgasolve (21,5%).
The Gupta family own 34,5% of Tegeta, while Dubai-based firm Fidelity Enterprises holds the remaining 15,5% of the business.
In an emailed response to Bloomberg, Oakbay Investments, the Gupta’s holding company, denied any allegations of interference from the Department of Mineral Resources.
“We’re clear that our transaction was completed on an arm’s-length basis and governed by good corporate governance. The transaction was completed by a willing buyer and a willing seller following transparent negotiations between the parties over several months,” the company said.
Corruption Watch executive director David Lewis told Bloomberg that “it looks terrible” and that “there’s no explanation for this sort of stuff that’s persuasive”.
“It goes to the capture of the state by business figures in connection with the political elite right up to the president,” he added.