Youth League leader emerges as a lobbyist in lucrative empowerment deal
Julius Malema – who has been driving a campaign to nationalise the country’s mines – has emerged as a key lobbyist in the controversial sale of a major state-owned mining asset.
The Sunday Times can today reveal that the government stake in Limpopo-based ASA Metals, valued at R250-million, will be given to a host of politically connected individuals despite it being earmarked for the poor.
They include soccer boss Irvin Khoza and Kgomotso Motlanthe, the son of deputy president Kgalema Motlanthe.
Malema was also a founding director in a consortium that was registered for the bid, shortly after discussions about the broad-based BEE deal commenced in 2006. He was later forced out. See Page 2)
But the Sunday Times understands that he has since held several informal meetings with those involved in putting the deal together.
Malema first publicly raised the issue of the nationalisation of mines at a Black Management Forum meeting on October 9 last year – about a week before ASA Metals and the Limpopo Development Agency (Limdev) were scheduled to announce the successful bidder.
The nationalisation campaign, which has made international investors uneasy, is also believed to be a way of putting pressure on Sinosteel, one of the largest trading companies in China, to relinquish its majority shareholding in ASA Metals.
SinoSteel holds 60% of ASA Metals, while Limdev holds the balance.
SinoSteel management dismissed claims it was under pressure to sell its shares.
“We don’t have that pressure. No one will force us to sell our shares,” said Suwei Zhang, chief executive of ASA Metals.
An official announcement on the sale of 30% of ASA Metals, from Limdev’s stake, is expected in three weeks.
However, it has been established that five consortiums and companies – from an initial short list of 43 – have been earmarked after being interviewed by the Limdev board a month ago.
The five will each get a 12.5% stake of the shares being sold.
The deal may seem minuscule, but SinoSteel is set to pump R3-billion into expansion plans over the next three years; this, according to Zhang, will increase the value of the mine “800 times”.
ASA Metals’ mining operation, the Dilokong Chrome Mine in Limpopo, already exports its chrome, which is used in the production of stainless steel, to China, Japan, Taiwan, Europe and the US.
The empowerment deal has been in the pipeline for more than three years but has been marred by political infighting, intimidation by politicians, and accusations that impoverished communities – the initial beneficiaries of the transaction – had been sidelined.
And several senior ANC politicians in Limpopo, where Malema wields major influence, believe that he launched the nationalisation campaign to draw attention away from the closely guarded mining empowerment deal.
One of the short-listed bidders, who declined to be named for fear of reprisals, described the entire transaction as “rotten”.
“You will be shocked to find out who else is involved (in this deal) … I’m terrified just talking to you. I’m not only risking the deal but also putting my life at risk. These people mean business and are not prepared to lose this deal at whatever cost.”
The Limpopo-based businessman, who has slammed the deal for its failure to include more disadvantaged communities, said members of the smaller consortiums had been coerced out of the bidding process even though they met all the necessary requirements.
He alleged that Khoza had used his political connections to “steal” a stake in the deal.
“(A)nd there are other politicians and their families involved, who have either signed up in their own personal capacity or used proxies,” he said, describing the deal as “a joke”.
The Sunday Times has established that the short-listed consortiums include Tunache Investment, led by Khoza and serial empowerment dealmaker Ronnie Ntuli; Rebone Mining Consortium; Kalapeng Mining Resources; Moribo Resources; and Dilokong Consortium. Buena Vista Trading, led by Kgomotso Isaac Motlanthe, features in one of the consortiums.
On Friday last week Moribo Resources was listed by the Companies and Intellectual Property Registration Office. But it was removed this week after the Sunday Times started inquiring about the company’s directors.
The Limpopo businessman, meanwhile, said that some of the smaller consortiums that had failed to make the short list, or the final five, were considering reporting the transaction to the Public Protector.
Malema this week refused to speak to the Sunday Times. The youth league’s spokesman, Floyd Shivambu, on Friday denied claims that Malema was benefiting, either directly or indirectly, from the deal or that he had lobbied on behalf of interested parties.
“It’s not true … I know that he’s never interacted with any government development agency,” he said.
Shivambu played down the league’s vociferous comments on nationalisation, saying: “Currently there has been no decision taken on nationalisation.”
He said it was an “unfortunate reality” that politically connected people and serial deal-makers were involved in the ASA Metals deal.
“We are calling for a policy decision to be taken by the ANC … we are not interested in what is happening now. That, unfortunately, is current practice and current government policy.”
Limdev’s transaction advisers, SizweNtsaluba VSP, declined to discuss the deal or explain why the announcement of the successful bidders had been postponed twice.
“The process is not straightforward and there have been delays,” said Aaron Mthimunye, one of the advisers.
Asked to provide a list of the companies that formed the Rebone Mining and Dilokong consortiums, Mthimunye said: “There is nothing I can do. I am governed by the confidentiality (agreement) I have signed with (Limdev).”
Limdev spokesman Leo Gama said he could not comment. “Once it is completed, our organisation will announce the winning companies and the public will know,” he said.
Several attempts were made to get comment from Kgomotso Motlanthe and Irvin Khoza about how they had managed to clinch a slice of the deal.
Little is known about Motlanthe, other than that he is a shareholder in four companies.
Yesterday, Presidency spokesman Vusi Mona said: “Whatever deals he (Kgomotso) is involved in are his private matters. It is not for Presidency to know (about such) transactions.”
