Norilsk Nickel sues Botswana government to recover around $271 million. The company claims to lose this money when a mining company backed by the state walked away after signing a deal that involved buying stakes of a mine in South Africa last year.
Botswana withdrew to buy stakes as it cannot afford the worth of under $279 million. This state-run company agreed to purchase 85% of Tati Nickel Mining Company and 50% of Nkomati Nickel Mine in Botswana from Norilsk Nickel for $337 million. Being the biggest producer of the metal in the world, Norilsk Nickel could not bear it and files a lawsuit against BCL. Botswana did not continue with the deal due to lack of funds.
The deal of Nkomati, declared by BCL as a strategic priority as a feature of its high-profile “Polaris II” enhancement and venture system, was intended to ensure the long haul eventual fate of BCL’s setups by acquiring the concentrate supply of smelter in Selebi Phikwe, Botswana. Every material decision and its approvals identifying with these transactions were approved and endorsed by the government.
The chairman of BCL Khaulani Fichani states that the situation of the company does not allow us to spend money on this big project. He told the reporters in Botswana’s capital Gaborone. A liquidator is managing BCL Limited these days. BCL stated in April that it would try to raise around $25 million to fund purchases in a bond sale.
Norilsk Nickel would defend the interests of the company under the transactions with jurisdiction in courts over this matter. The company gave this statement on last Monday. Norilsk has sent the notice related to proceedings to the attorney general of Botswana, minister of finance and minister of mineral resources. This company stated that the deal has to come or guaranteed by government however state did not put any effort to get done with the deal.
It seems that BCL has no regard for the reasonable, frank and fair dealings with Norilsk Nickel and it completely neglected to respect the commitments under the deal agreement made in October 2014. This let down to keep the obligations under sale agreement is unacceptable in any business transactions whatsoever.
Botswana has a notoriety of being one of the most secure and best places to put resources into the entire Africa, and it has earned the most grounded credit rating in the continent on this basis. However, Botswana government has acted in a strange way on BCL which brings the legitimacy of that notoriety into question. These negative consequences could be felt over the economy of her entire nation.
Financial specialist and investors are probably going to watch Norilsk’s case intently as Botswana has been viewed as the best-evaluated nation for mine interests in Africa, an area where global mining organizations regularly need to measure the dangers of indeterminate approaches and confiscation of assets.
The result of this fight in court may change the positive discernment investors have of Botswana. The most recent survey of Canadian research organization Fraser Institute positioned the nations as the top mining investment venture in Africa and the twelfth of 104 governments internationally for the solidness of its approaches. The nation was put behind by Western Australia on regulatory certainty.