Zuma mine empire is crumbling

2010-03-27 09:46

AURORA Empowerment Systems, the emerging mining empire which is led by Nelson Mandela’s grandson and Jacob Zuma’s nephew, is working around the clock to save the gold- mining assets it inherited from last year’s liquidation of junior miner Pamodzi Gold.


In the past few weeks the company, whose architects are Zondwa Mandela and Khulubuse Zuma, found itself being vilified in public after it failed to pay its workers and suppliers due to a cash crunch.


Aurora emerged as a preferred bidder to acquire the Orkney and East Rand mines from the liquidators, and so it was given a trial run to manage the operations on an interim basis with a view to finally purchasing the mines. The mines have proven to be a sore point for Mandela and Zuma, however, because Aurora is losing R30 million a month in a bid to save the ailing mines.


On Friday Mandela said the firm was struggling to raise funding to ease the cash-flow crisis, but a group of American investors could come in as white knights.


“I have spent a week of 20-hour days working on this with a group of American investors who are expediting their due diligence.


“We hope this will result in the funding we need, but cannot be sure of anything as their due diligence has turned up a multitude of problems and hidden costs we failed to see in our due diligence last year,” said ­Zuma, the 26-year-old chairperson of Aurora.


At the heart of Aurora’s cash crisis is the massive capital investment required at the East Rand mine and a refusal by its Malaysian backers, AM Capital, to inject more money into the firm’s gold-mining venture.


“Aurora and AM Capital, which owns the largest individual stake in Aurora, were led to believe the assets we bid for were significantly better than they are. On taking a closer look at the actual situation, AM Capital refused to put up capital they had promised to contribute,” Mandela said.


He hinted at the mining firm having considered pulling out of the interim management deal.


“We have invested substantially in improvements on the East Rand and if we walk away the money will be lost.


“The risk is that if we walk away there will be rapid flooding of the surrounding area, with potential loss of life. The only reason we have not walked away so far is our strong sense of social responsibility and our hope that we can salvage the deal and the jobs attached to it by securing new investment,” Mandela said.


The non-payment of workers at the Orkney and East Rand mines has angered the National Union of Mineworkers (NUM), the country’s main voice for mine labourers.


NUM spokesperson Lesiba Seshoka said workers at the East Rand mine were owed R14 million by Aurora, while at Orkney they were owed R4.8 million. Aurora is planning to retrench 1 441 of the East Rand’s 2 444 labour force. This has prompted the NUM to call a strike.


There were also reports that Eskom was claiming R13 million from Aurora for an unpaid electricity bill.


Seshoka said Zuma and Mandela were inept when it came to financial management. He said they made one of their biggest blunders last December when they bought a 60% stake in struggling Blyvoor mine from DRD Gold for R376 million. This was after it was rumoured that Aurora was planning to spend R1 billion on buying the failed Pamodzi mines.


“They bought mines that are failing. You buy one or two mines and then set aside money for the operations. It looks as if they did not have money for operations and we find this very worrying.


“When they bought Blyvoor we expressed our concern with the liquidators that these guys are inexperienced at mining.


“When they came up with the highest bid for the Pamodzi mines, they claimed to have the financial muscle.


“Where is this muscle now?” asked Seshoka.


Liquidator Enver Motala said the liquidators were still confident that Aurora could turn things around.


Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.