OPCL properly acquired Chinese company shares in Ghana Bauxite

The Ghana Bauxite Company (GBC) has refuted allegations of impropriety in the acquisition of the 80 per cent stake in the company previously owned by a Chinese company by a Ghanaian entity.

In a statement, the GBC said the Ghanaian entity – Ofori Poku Company Limited (OPCL) – bought the 80 per cent stake from Bosai Minerals Company of China in a private transaction in accordance with the law and corporate governance practices after the Government of Ghana declined its right of refusal to purchase the shares.

“The Government of Ghana (GoG) assessed the offer for the sale of an 80 per cent stake in GBC in a private sale by Bosai Minerals and decided that it had no business running a mining enterprise, nor the finances to acquire the company, the working capital to run the company, or the significant investments required to turn the company round,” the statement said.

Accusation

Private legal practitioner, Martin Kpebu, had called for investigations into the sale of the shares by the Chinese Company to OPCL, a fully owned Ghanaian entity.

He alleged that the $12.5million sale price was grossly an undervaluation of the company, owing to the fact that the company was now worth around $1billion two years after the sale, suggesting that the GoG should not have declined the right to purchase the company.

He also alleged a conflict of interest in the transaction

No basis

However, the GBC debunked the allegations, describing them as untenable, without basis and an attempt to destroy a Ghanaian company that was contributing positively to the economy of the country.

First of all, it said the acquisition was purely a private transaction between OPCL and Bosai Minerals after the GoG, which still owns 20 per cent of the company, refused to purchase the remaining shares.

The company wondered why Bosai Minerals Group, the Chinese entity, would sell its stake if indeed the company was doing well at the time of the sale or would undervalue the company when it stood to lose from such an action.

It said this was not the first time the GoG had refused to exercise its right to buy the company outright as it did the same in 2010, in which the GoG consistently maintained that it had no interest in running a mining company because it was not in its strategic interest.

According to the statement, at the time of the transaction in 2021, the mining company was in a serious crisis as it was in serious debt, workers were on strike and production had gradually grounded to a halt due to a lack of investment.

The statement explained that the company’s current valuation of $1 billion was due to prudent and efficient management, and sound and consistent investment which had rescued the company from the abyss.

“The $1bn valuation was assessed by the Ministry of Finance to support a bill in Parliament.

It is informed by the investments of well over $100M over the last 2-3 years, that have been made in GBC, including new and modern equipment, revamped and refurbished facilities, the renewal and a 30-year mining lease extension, the work being undertaken to confirm proven reserves of bauxite.

Valuation is an opinion. It is only validated if someone/entity pays that amount for the company,” the statement added.

It said even if the current valuation was accurate, the GoG’s 20 per cent stake in the company was now worth over $200m “representing nearly 8,000 per cent appreciation in value over just 2 years.”

No conflict of interest

The GBC further refuted the allegation of conflict of interest in the sale, explaining that as a private entity, it was not subjected to “insider trading rules” as applicable to a publicly listed company on the stock market.”

“GoG has directors on the Board of GBC. In the event GoG had acquired the shares, exercising its right of first refusal - would that be considered "insider trading"?’ the company queried.

The GBC further refuted claims that the person who did the valuation of the company at the time of the sale was the Chief Financial Officer of GBC or OPCL.

The statement called on the public to support the GBC which is now a fully owned Ghanaian entity to continue to deliver value for the country.

“GBC has experienced a huge turnaround. It is now a fully owned Ghanaian company! We should celebrate success of our own,” the statement added.

Background

Last year, Parliament unanimously ratified the extension of the mining lease of the GBC for another 30 years.

The GBC, which has been in existence for over 80 years, is the only bauxite mining company in the country and controls the Awaso bauxite mine in the Western North of the country.

Originally owned by the British Aluminium Company Ltd, the government acquired a 55 per cent stake in the company in 1972, under the Mining Operations (Government Participation) Decree, 1972 (NRCD 132), passed pursuant to the National Redemption Council’s policy of “taking over the commanding heights of the economy.”

However, the company faced several challenges after the acquisition, with production decreasing from 407,000 tonnes in 1974 to 64,000 tonnes in 1982.

The government, therefore, decided to divest its interest in the company. In 1997, Alcan, a Canadian company, acquired 80 per cent stake in the company, with the government holding the remaining 20 per cent.

A British-Australian multinational, Rio Tinto, acquired Alcan’s interest in the company before selling same to the Bosai Minerals Group in 2010.

In 2022, however, Ofori-Poku Company Limited (OPCL), a wholly owned Ghanaian company, acquired the 80 per cent stake held by Bosai, making the company, for the first time in its 80-year history, a wholly owned Ghanaian company.

OPCL was incorporated in 1990 and has enormous experience in the mining industry, having operated as a leading supplier of various mine services, including haulage, transport and provision of climate change solutions.

Writer’s email: emma.hawkson@graphic.com.gh