E5.4BN PROJECT: ROYAL AIDE, MANAGER SEIZE MINE FROM SA INVESTORS

MBABANE – After securing E5.4 billion funding for a coal mining project at Mpaka, a South African company has been pushed out of the investment.

This is despite the fact that His Majesty King Mswati III had issued a prospecting licence to Lurco Coal Eswatini (Pty) Limited for the Mpaka coal project. Lurco Coal Eswatini is a subsidiary of Lurco South Africa, a mining company listed on the Johannesburg Stock Exchange (JSE). Listing means the formal admission of securities of a company to the trading platform of the exchange. It means the company is transparent in its business dealings. The directors of Lurco Coal Eswatini and Lurco Group in South Africa are Ellington Nxumalo and Aubrey Chauke.

Invested

In 2019, SA magazine publication Mining M, reported that Lurco Group invested E300 million in the surface deposits, which consisted of some 70 million metric tonnes (MT) in return for the mining licence – at the Optimum Coal Mine, the Mpumalanga thermal coal mine.To prove its capability, it is said that Lurco Group supply coal directly to Eskom. Investigations by the Times SUNDAY have revealed that a company associated with two well-known emaSwati has assumed control of the mining project at Mpaka. This is LCE Investments (Pty) Ltd, whose directors are Mlungisi Dlamini and Baya Mmiseni Dlamini.

Mlungisi is a manager in one of the big supermarkets in the country, while Baya is a Royal Protocol Officer.
The two Dlaminis are also directors of Kwasa Colliery Limited. They have, however, roped in a Chinese businessman, Fei Zheng, to be a director at Kwasa Colliery Limited, alongside James Bongane Mathebule, who hails from Mozambique. Documents show that Zheng was born in Chn Anhui-China.  Anhui is an eastern Chinese province known for its Huangshan Mountains. He is now based in Mozambique.

Directorship

On November 3, 2022, Baya and Mlungisi took over LCE Investment. Initially, the company had nothing to do with mining. Upon assumption of directorship at LCE, they partnered with two businesspeople; Fortunate Bongiwe Mdluli and Hlobisile Hlophe. It must be said that Mdluli and Hlophe are the co-founders of LCE. On November 4, 2022, they (Mdluli and Hlophe) resigned from being directors of LCE.

The company was left in the hands of Baya and Mlungisi. Impeccable sources said the fact that Baya had been registered as a director for the two companies (LCE and Kwasa) did not mean he was commissioned by the royal family to undertake the coal project at Mpaka. It has been established that he forms part of the King’s protocol.
At some point, he was present when Nxumalo, one of the directors of Lurco Coal Eswatini, presented a cheque, as an offering in terms of Eswatini culture (kwetfula), to the King.  

It is understood that the authorities of the country might have assumed that they were issuing a mining licence (replacing the prospecting one) to the same company – Lurco Coal Eswatini. Documents seen by this newspaper show that trouble started when the directors of Lurco Coal Eswatini complained to the Registrar of Companies on March 22, 2022 about a listing of new directors without their consent. An enquiry was then instituted by the Registrar of Companies into the purported listing of the new directors.

Aware

Details on the listing of the new directors will not be disclosed at this stage, as this issue may be heard by the court.
However, it must be said that certain elements, allegedly prepared documentation that purported appointment of new directors of Lurco Coal Eswatini. It is said that owners of the company in South Africa were not aware of this development. This is regardless of the fact that their signatures were appended against their identities.

Lurco Coal Eswatini was established in 2011 as Lurco Coal Swaziland. It must be said that the company was dormant for 11 years as it struggled to obtain a minining licence. According to the documents, the owners of the company in South Africa understandably authorised Mlungisi to only change the name of the company. Of course, it was changed to Lurco Coal Eswatini. It is said he was promised commission to do this job, which carried an offer of five per cent of an amount of money that was not disclosed in the papers.  

Capital injection

The enquiry report states that he turned down the five per cent offer. After he had registered the company, Mlungisi is said to have informed the Registrar of Companies, Msebe Malinga, that time went by and there was still no capital injection from Nxumalo and Chauke. It is understood that he (Mlungisi) told Nxumalo that he would raise the capital but he (Nxumalo) didn’t believe he had the capacity to raise the money. Indeed, he was able to raise the money, according to the enquiry report.

Mlungisi is said to have claimed before the registrar of companies that he paid for Lurco’s mining licence from his pocket. He claimed to have also settled the company’s tax arrears as it was dormant since 2011. These are the findings of the registrar of companies as indicated in the documents:

• The extraordinary meeting of August 18, 2021 was not properly constituted;
• That shareholders Ellington Nxumalo, Aubrey Chauke, Emmanuel Seyama and Mandla Mdluli were not in attendance at the meeting of August 18, 2021 as purported by the extracts of the minutes of the extraordinary meeting;
• That the signatures appended next to the shareholders’ names of the above mentioned shareholders were questionable;
• The resignation of Emmanuel Seyama on September 30, 2021, is questionable;
• The extraordinary meeting of October 4, 2021 was not properly constituted;
• That shareholders Ellington Nxumalo and Aubrey Chauke were not in attendance at the meeting of October 4, 2021 as purported by the extracts of the minutes of the extraordinary  meeting;
• That the signatures of the shareholders do not appear in the resolution of October 4, 2021.

In consideration of the findings as mentioned above, the registrar is said to have revoked and declined the changes made in Lurco Coal Eswatini (Pty) Ltd. The registrar rescinded all the changes and resolutions made in the absence of Nxumalo and Chauke. The company was then returned to the original directors, wherein Nxumalo and Chauke hold 50 per cent shareholding apiece.

Despite regaining full control of their company, they are reportedly having difficulties in accessing the project site at Mpaka. It is said they had been told that the duration of their prospecting work had elapsed. This is regardless of the fact that they had been made to run from pillar to post, correcting questionable documentation about their company.      

  It has been established that the Minerals Management Board, under the chairmanship of Prince Guduza hasn’t offered tangible assistance to Nxumalo and Chauke, despite their complaints that they were removed from the project unfairly. They declined to shed light on the matter when they were telephoned on Friday by the Times SUNDAY.

Investigations

“We are astute businessmen, whose ethics do not allow us to talk about the issue in the public space at this point in time. In short, we reserve our comments,” said Nxumalo, while Chauke echoed his brief statement on the issue.
Despite their refusal to comment on the matter, investigations indicated that they had appealed to the Acting Minister of Natural Resources and Energy, Jabulani Clement Mabuza.

Mabuza said he would not divulge private information that pertained to entities reporting to his portfolio.
“My comment in public can compromise my integrity as a minister,” he said. Manqoba Khumalo, the Minister of Commerce, Industry and Trade, was also of the view that the matter was still being discussed at boardroom level.
In an interview, Mlungisi confirmed that Malinga, the Registrar of Companies, called him to his office in Mbabane, where he explained that he, as a matter of fact, who was removed from the directorship of Lurco Coal Eswatini (Pty) Ltd.

He disputed the fact that he and Baya were middlemen. He said every cost of the Lurco Coal Eswatini (Pty) Ltd was borne by him. “The costs for the surveyor diagrams were paid by me. They were in Johannesburg when I ensured that all the company’s paperwork was up to date,” he said. “There was no cent paid by Lurco.” Asked who was in control of the Mpaka project, he said: “I cannot discuss Board issues. I’m a businessman.” Asked about expertise, if he and Baya have it, he responded that ownership of a company did not require expertise.

Expert

“You, as a journalist, can own a hospital. You don’t need to be a doctor to own a clinic or hospital. You don’t need to be an expert in agriculture to have a farm. You can employ experts in all fields to ensure efficiency of the business,” said Mlungisi. He said he was at liberty to open a company of his choice and contribute to the development of the country. He said he had never robbed anyone of any company, as he and Baya were running theirs.

“The problem with emaSwati is that we don’t support each other. We are here to create jobs for local people. Your questions show that you don’t want emaSwati to get employment,” he said. Mlungisi said he did not get the report of the enquiry instituted by the registrar of companies. Mlungisi insisted that he did everything for Lurco Coal Eswatini (Pty) Ltd according to the book.

Baya was not contacted for comment as Mlungisi commented on behalf of their company. Prince Guduza and Commissioner of Mines Robert Biyela, were not available for comment. However, this publication got hold of their superior, the acting minister of Natural Resources and Energy. On another note, it was reported that Lurco had secured E5.4 billion investment commitment from GEM Global Yield LLC SCS (GEM), a private alternative investment group with offices in Paris, New York, and Nassau (Bahamas).

It was planning to employ 1 000 emaSwati at the time it lost control of the mining project. Lurco South Africa falls under Magni Investment Holdings, which was to take a majority stake in Johannesburg-listed Sable Exploration and Mining Limited (SEAM) ahead of a reverse listing of its mining assets.

Production

It has about 1.5 million tonnes of annual coal production, according to its website. It began operating in 2010 by trading coal and supplying some of it to local hospitals. In 2019, it unsuccessfully bid for control of Optimum Coal Mine – the Mpumalanga thermal coal mine once operated by Gupta company; Tegeta Exploration & Resources.
SEAM was previously known as Middle East Diamond Resources and before that it was Stable Platinum, a company listed in 2012 by diamond sector investment analysts James Allan and René Hochreiter.

To demonstrate its capacity to undertake a project of magnitude at Mpaka, it is said that Lurco’s Magni Investment Holdings (MiH) had also agreed a share subscription facility of up to E4.45 billion for three years. This followed the reverse listing with Global Emerging Markets (GEM), a company described as ‘an alternative investment group’.
In 2018, an agreement was reached for the establishment of a 50/50 joint venture partnership between Shumba and South African black-owned Lurco Group South Africa at the Sechaba thermal coal project.

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