Zim miner refuses to pay P300m debt

• says he is owed P590 million
• P35 million monthly electricity bill
• P215 million electricity debt


“The reality is that BCL is not an attractive asset in the market and I can tell you that not all creditors will recover their money, maybe a few if we are lucky,” BCL liquidator Nigel Dixon- Warren explains then he reads financials on the projector screen-“Thirty-seven, four hundred and forty-nine million… those are administrative fees for me, the liquidator.”
While BCL is being sent to its death bed, its undertaker will walk away P37 million richer for facilitating a smooth memorial service for the old coal concessionaire.
But before that there are few challenges, RioZim Ltd, a leading mining company in Zimbabwe is refusing to pay off its P300 million (US$30,495,432.00 ) debt to BCL stating that the cash strapped coal company has violated contractual agreements amounting to P590 million (US$59 048 000) BCL liquidator Nigel Dixon- Warren has revealed.
Speaking on the sideline of the 1st BCL Creditors Meeting at Travel Lodge on Monday, Dixon-Warren was not able to state whether BCL would successfully recover the debt owing to logistical challenges of having to apply for recognition by the High Court of Zimbabwe to pursue the stock exchange listed RioZim Ltd.
The recently released and damning liquidator’s report which Dixon-Warren was presenting to creditors indicates that “historically BCL had entered into various matte purchase agreements with RioZim for the supply and purchase of matte. The amount owed is approximately US$30 million in respect of shipments of matte that were delivered, but not paid for and these agreements date back to 2014.” “The provisional liquidator has commenced proceedings for the recovery of these funds in Zimbabwe. This requires him to be recognised as the provisional liquidator in the High Court there. This application is being drafted. RioZim has disputed that any monies are due to BCL,” the report says.
BCL entered into a matte purchase agreement for a period of 12 months commencing June 2013 and with a subsequent High Sulphur Matte Supply & Purchase Agreement and a Low Sulphur Matte Supply & Purchase Agreement with RioZim Limited (“RioZim”). The latter being effective from 1 June 2014. Based on documents seen to date, the latter contracts were not signed by the parties. RioZim owes BCL US$30,495,432.00 for the period January 2014 to January 2015, in respect of shipments of matte that were delivered, but not paid for.
Dixon-Warren’s report states that RioZim confirmed, as part of the audit process, prior to liquidation, that the monies were due. However based on investigations to date, BCL submitted a non-binding offer to RioZim in November 2015 for the acquisition of 51% of RioZim Base Metals (Private) Limited, a wholly owned subsidiary of RioZim which owns the Empress Nickel Refinery in Zimbabwe. The basis of the offer was that a portion of the sale price would be to settle the $30, 5 million due from RioZIm.
Documents reveal, however, that there is no evidence that the non-binding offer was accepted; the agreement is being investigated further. While the offer seems to have been justified as being part of the overall Polaris II strategy, the report argues that the contracts were poorly and inadequately drafted and maintained.
Dixon Warren says that while he has commenced legal proceedings for the recovery of the monies considered due, RioZim has also submitted documentation purporting to be a counter-claim against BCL for failing to supply the agreed volumes of matte per the (unsigned) contracts. The amounts being claimed is US$59 048 000. The documentation purportedly supporting this claim was submitted to the provisional liquidator, KPMG, on 14 October 2016.
The liquidator’s report shows that the BCL management poorly managed and measured the domestic and operational use of both water and electricity accruing a whooping P215 million in bills.
The monthly electricity bill exceeded BWP 35 million and the water bill exceeded BWP 3 million.
“Wastage and inefficiency was rife. There was very little regard for the cost of water and electrical usage on the site either for operations or domestically. It has been identified that six of the ten primary electricity meters coming to site were incorrectly wired (which have now been corrected) and as such BCL was forced to rely on the meter readings of BPC which have been identified as giving incorrect readings.
Exorbitant water allowances were given to employees ranging from 120,000 litres to 400,000 litres per month, per household. Compounding the financial woes of BCL, water consumption in excess of allowances was inconsistently, or not at all, recovered from staff as required by the company’s policy. As most houses did not have a separate water meter, usage was not monitored or managed, notes the report. While no direct evidence has been found, it is believed employees abused the water allowance, resulting in being stolen as well as being taken to cattle posts and farms.
BCL was also significantly in arrears with Botswana Power Corporation (BPC) having defaulted on payment from December 2015, owing it as much as BWP215 million. In terms of section 433 of the Companies Act ,a utility provider can refuse to supply to a company in liquidation if the company is in default at date of liquidation unless outstanding amounts are settled. These payments constituted costs of administration. It was necessary to settle amounts outstanding to BPC and Water Utilities Corporation in order to guarantee continued supply, the liquidator’s report indicated. Government provided the bailout.