THE Industrial Development Corporation (IDC) has agreed for Kalagadi Manganese to sell some of its assets to help repay approximately R3 billion of outstanding loans owed to the company.
“What we try to do is a ‘work-it-out’ in partnership. That’s why we consented to some of their requests, including instances where they might sell some of their assets,” said TP Nchocho, CEO of IDC.
“I’m not free to go into specifics, but we’ve taken a cooperative and working approach to this issue. I’m much more optimistic about the investment,” he said.
Kalagadi Manganese and the IDC clashed in court last year over differences of opinion over how to resolve the miner’s unpaid debt. He also owed the African Development Bank about R2.9 billion.
The IDC has called for a restructuring of Kalagadi Manganese, including its senior executives such as Daphne Mashile-Nkosi, the chairwoman who founded the company. Mashile-Nkosi refused to budge.
Nchocho said today that there has been a significant restructuring of Kalahari Manganese with the adoption of an owner-miner operating model as well as the appointment of new operational and financial directors. However, the company was not generating enough cash to service its debt on which the IDC had made an “inevitable” provision, Nchocho said.
“The way the business works, it washes its face. It does not generate enough free cash flow to service debt, but it covers its operating costs,” he said of Kalahari Manganese. Production was around 60% of its production capacity of 250,000 tonnes per year,” he said.
Nchocho was commenting in an interview following the presentation of IDC’s annual results for the year ending March in which, at company level, it produced a taxed profit of R2.7 billion, in down slightly from the R3 billion in FY2021. At group level, taxed profit totaled R6.3 billion for the 12 months, well above the near balance it produced in 2021.
Trade, Industry and Competition Minister Ebrahim Patel said the company should “equip itself” in order to play a role in counter-cyclical investments. He criticized the company’s increased spending but declining jobs provided by its industrial investments.
The IDC recently announced that it had taken a 44% stake in Okiep Copper Mining, a company controlled by Orion Minerals and operating in the Northern Cape province. But he is also a shareholder in another company, MC Mining, which is developing a metallurgical and thermal coal mine in Limpopo province.
Asked if the IDC would consider new investments in thermal coal given the energy crisis in Europe that has forced a change in attitude towards fuel, Nchocho said: “We will continue to fund coal assets to the extent that they feed into the country’s energy value chain. We will not finance a new, larger mine for export purposes”.