'Zwane negotiated Gupta purchase of Optimum mine'
Former Glencore CEO Clinton Ephron has told the commission of inquiry into state capture that former mineral resources minister Mosebenzi Zwane negotiated the sale of the Optimum coal mine to the Gupta family.
The mine’s primary purpose since the 1970’s was to supply Eskom's Hendrina power station in Mpumalanga with coal.
The company is now under business rescue and stopped supplying Eskom with coal in February 2018.
Ephron told the commission that Optimum underwent financial difficulties in 2015 after it suffered a loss of R829 million.
A new coal supply agreement was reached between Eskom and Glencore to allow the company to recover its financial losses, but soon after a new board was appointed at Eskom and Brian Molefe took over as CEO.
Ephron told the commission that Molefe refused to sign the new agreement, which came as a surprise as there was an agreement that it was to the benefit of both companies.
"While we understood that Mr. Molefe was entitled to his position and how it might benefit Eskom in the short term, and the power utility would continue to receive coal at low prices. We still felt that Mr. Molefe's position did not necessarily appreciate the risk that Eskom faced after 2018 where they would have no security of coal supply for the mine and would be left in a very weak negotiating position.”
Ephron said while the negotiations were ongoing an approach was made by KMPG approached with an offer from an anonymous buyer for Optimum.
The buyer was later identified as the Gupta-owned Oakbay.
When the parties failed to reach an agreement, Zwane's office contacted Glencore's headquarters in Zurich to request a meeting with the company's CEO Ivan Glesenberg.
"The meeting took place at a hotel in Zurich on December 1. Salim Essa was also in attendance, Mr. Glensenberg didn't know who (Gupta associate Salim) Essa was. When he asked who he was, he was told that he was an advisor to minister Zwane.”
Zwane then indicated he wanted to discuss the sale of Optimum.
"I also understand that Mr. Glesenberg informed Mr. Zwane that Glencore is willing to provide sufficient funding to have Optimum mine discharged from business rescue and that Optimum would continue supplying Eskom with coal but that Glencore would be open to a sale at an appropriate price. Minister Zwane responded by saying he was sure Glencore could reach a deal with the Gupta family.”
Ephron says a second meeting was arranged for the next day, which he attended with Tony Gupta, Essa, Zwane and Glesenberg.
"The meeting was opened by minister Zwane, who noted the importance of securing employment at the mine. He expressed concern that the mine should not enter a liquidation process and stated that the best outcome would be for Glencore and Oakbay to reach a deal. Mr. Zwane left the meeting and Mr. T Gupta and Mr. Glesenberg discussed the third offer."
He says an agreement was reached to sell Optimum for R2.15 billion - double the amount of the first and second offer.