PARIS and WASHINGTON, Jan. 29, 2015 /PRNewswire/ -- Southern Africa Resources Ltd (SARL) today announced that on 22nd January it submitted a notice of dispute and that it will bring international arbitration proceedings against the Kingdom of Swaziland. The actions are a result of Swaziland's effective expropriation of SARL's 50 percent stake in SG Iron Ore Mining (PTY) Ltd, a joint venture created by SARL and the Kingdom of Swaziland to restart the mining of iron ore in Swaziland.
SARL will bring its claim before the ICSID, part of the World Bank Group, requesting compensation of more than USD 141,000,000, plus other damages and interest. This will be the first ICSID arbitration against Swaziland since it became a party to the ICSID Convention in 1971.
SARL invested over USD 50 million in the project. SARL contends that the King's appointees in the company subsequently engineered the company and project to collapse.
"The collapse of the project was orchestrated by the King's appointee to the Board of Directors, whose main intention appears to have been to avoid repaying the loan/advance dividend of USD 10 million that SG Iron Ore made to King Mswati III in 2012," said SARL Counsel William Kirtley of Dugue & Kirtley AARPI.
According to the notice of dispute, beginning in August 2014, the King's appointee to the Board of Directors did not permit any further iron ore to be sold, despite vessels arriving at the port to load the cargo, starving the company of cash. The King's appointee to the Board of Directors then used the artificial cash crisis as a pretext to request that the company be placed under Judicial Management and then liquidation.
This action was taken without the approval of the foreign investor, and without the Board of Directors' approval, despite the agreement that SARL's President, who is also the Executive Chairman of SG Iron Ore, Shanmuga Rethenam, was to chair all SG Iron Ore's Board meetings and to have the casting vote on all matters.
Swaziland's judiciary then put the company into provisional liquidation and the King of Swaziland sent his army to guard the mines.
Swaziland has also threatened to issue a Warrant of Arrest for Shanmuga Rethenam and to request an Interpol Red Alert, although it has yet to specify a criminal charge.
"Clearly the threat to issue a Warrant of Arrest for one of the largest foreign investors in the country is totally uncalled for," Kirtley said.
"It is a shame that the Kingdom of Swaziland has refused to negotiate an amicable resolution to this investment dispute, which concerns a project that should have been in the interest of both SARL and Swaziland, and with respect to which SARL spent over USD 50 million to help rebuild Swaziland´s mining industry, which has fallen into disrepair," said Kirtley. "By using State organs to press the reset button, Swaziland has avoided the repayment of a loan/advance dividend of USD 10 million, while reducing the value of SARL's investment to nothing. We are confident that our client will prevail before the impartial arbitral tribunal that will decide whether Swaziland´s actions constitute an illegal expropriation of SARL´s investments in the country."
SARL has requested negotiations with the Kingdom of Swaziland, which has shown no interest in negotiating. SARL has also put the Kingdom of Swaziland on notice that, in order to ensure that sufficient funds are available outside of Swaziland to indemnify SARL for the losses wrongfully caused by Swaziland, it will seek to freeze the SACU revenue receipts Swaziland receives from Southern Africa Customs Union (SACU), as well as any other assets including iron ore or other cargos transported to South Africa or Mozambique by Swaziland.
William Kirtley and Christophe Dugue of the law firm Dugue & Kirtley AARPI in Paris, France, are serving as counsel for SARL.
About SG Iron Ore Mining (PTY) Ltd.
SG Iron Ore Mining (PTY) Ltd. (formerly Salgaocar Swaziland (PTY) Ltd) was created in 2010 to mine iron ore at Swaziland's Old Ngwenya Mine. SG Iron Ore Mining was in the process of recycling iron dumps left behind by Anglo American, from which iron ore was extracted using modern technologies and sold to China and other countries. Due to the expropriation of SARL's interest in the company, approximately 700 citizens of the Kingdom of Swaziland have lost their jobs.
About Southern Africa Resources Ltd
Southern Africa Resources Limited, (formerly Salgaocar Resources Africa Limited), was founded and is headed by Shanmuga Rethenam. The company is a Special Purpose vehicle created for holding the investment in the Iron Ore Mine in Swaziland including Shareholding and Investments in the form of Equity and Debt. It also set up and operated the complete logistics chain to move the Iron Ore from Swaziland to designated ports of the buyers in China and other countries, which included road, rail and sea transport. It is the foreign joint venture partner in the mine jointly owned by SARL, the Government of Swaziland and the King of Swaziland. SARL provided all funding and technical knowhow for Mining and Logistics for the Iron Ore Mining Project.
SOURCE Southern Africa Resources Ltd (SARL)