The coal joint venture between Glencore and African Rainbow Minerals (ARM), led by Africa’s first Black Billionaire Patrice Motsepe, faced a major setback as the North Gauteng high court rejected its appeal regarding diesel rebates from the South African Revenue Services (Sars).
This decision by the North Gauteng High Court impacts the joint venture’s financial standing, as it is now obligated to pay Sars significant amounts unless its legal team, headed by Wim Trengove, SC, opts to approach the Supreme Court of Appeal for recourse.
The joint venture oversees operations at the Goedgevonden mine, a thermal coal mine in Mpumalanga, with an annual capacity of 6.7 million tonnes. The mine’s output is split between the South African power utility Eskom and exports through the Richards Bay Coal Terminal.
The venture, comprising a 49-percent stake held by Glencore and a 51-percent interest owned by ARM under Motsepe’s leadership, failed to secure leave to appeal the earlier decision regarding diesel rebates.
Motsepe’s ARM faces Sars headwind: A deep dive into the diesel rebate battle
ARM, a South African mining and minerals company, has diverse interests in iron, coal, copper, gold, platinum, and other precious metals. Africa’s first Black Billionaire, Motsepe, the founder of ARM in 1997, retains a significant 39.7-percent stake in the mining group.
The dispute with Sars revolved around the eligibility of the joint venture for diesel rebates. Sars contended that the venture lacked a valid mining right in its name, as the rights were held by Glencore, which took ownership during the merger with Xstrata in 2013. The court upheld this argument, stating that the entity registered for diesel rebates was not the rightful holder.
In response to the ruling, the judge noted, “To expect the commissioner to interrogate the terms of a mining right, which has been registered in someone else’s name, will be placing too onerous responsibility on the commissioner.” The judge further emphasized that the court found no compelling reason to hear the appeal.
Motsepe’s vision: ARM’s lithium and copper pursuit amidst rising global clean energy costs
The court’s decision comes as a blow to Glencore and ARM, necessitating payment to Sars running into millions of dollars. This underscores the complexities faced by companies operating in the South African mining sector and may impact ARM’s future financial strategies.
ARM in recent times has demonstrated strategic resilience by diversifying its mining portfolio. In a noteworthy move in 2023, ARM secured a 50-percent joint venture stake in the Nkomati nickel mine in Mpumalanga through an agreement with Norilsk Nickel Africa Proprietary.
This aligns with Motsepe’s proactive pursuit of valuable lithium and copper assets, addressing concerns he expressed in September 2023 about escalating prices amid the global clean energy transition. The outcome of the tax rebate dispute may influence ARM’s ongoing strategic decisions in the dynamic mining landscape.