Norilsk Nickel to open legal proceedings over Nkomati mine deal

Norilsk Nickel Group says it has served notice that it intends to open legal proceedings in Botswana against that country's government in relation to the sale of a 50% interest in the Nkomati mine in South Africa.

The company alleged the Botswana government was involved in the reckless trading of BCL Ltd and BCL Investments Proprietary Ltd (together, BCL).

It was seeking to recover the $271m plus damages and other costs owed in relation to the sale of a 50% interest in the Nkomati mine, and the $6.4m owed in relation to the sale of the Tati mine in Botswana.

Botswana's government was the ultimate shareholder of BCL through its corporate vehicle MDCB.

In October 2014, Norilsk agreed to sell its operations in Africa to BCL for a total price of $337m, although that was later reduced after BCL and the government sought price concessions.

The Nkomati deal, announced by BCL as a strategic priority as part of its high-profile 'Polaris II' diversification and investment strategy, was designed to guarantee long-term future of BCL's operations by securing the supply of concentrate to its smelter in Selebi Phikwe, Botswana.

The Government was involved in or approved all material decisions relating to this transaction.

"It is well known that BCL had always historically relied on financial support from the Government to survive and, in view of BCL's financial position, it was clear that most if not all of the funding for the Nkomati deal would have to come from or be guaranteed by the Government," said Norilsk in a statement.

"However, although BCL became obliged to buy Nkomati on 13 September 2016, BCL and the Government have made no attempts to complete the deal, in clear breach of the agreement with Norilsk Nickel."