DAPHNE Mashile-Nkosi is chairman of Kalahari Resources, joint venture partner with ArcelorMittal and the Industrial Development Corporation (IDC) in the Kalagadi manganese project.

SUMMIT TV: Kalahari Resources made headlines after a South African court ordered ArcelorMittal, partner in the company's manganese mine, to pay more than R241m in terms of its shareholder commitments, but the steel maker is not taking this lying down. What does this mean for the future of this mining mega-project? What led to ArcelorMittal refusing to pay what it was meant to in terms of its shareholder commitments?

DAPHNE MASHILE-NKOSI: We had agreed in 2007 and subsequently in 2008 that ArcelorMittal would subscribe for 50% of the shares in Kalagadi, based on the fact we had the mining rights and geological reports that proved there was manganese. After that, we agreed with ArcelorMittal that we would develop the three-in-one project, as described in the shareholders' agreement, that would entail building a mine, a sinter plant and smelter.

In 2008, there was the financial crisis and ArcelorMittal said, "We don't think we want to proceed," but we had already engaged some of the suppliers to start shaft-sinking on January 5 2009. After some time ArcelorMittal was persuaded to continue, so we continued despite the markets not doing well.

At the time ArcelorMittal subscribed for 50% of the shares because it wanted security of supply, but later on it decided it was going to have a mining division and go back into mining, which made it a serious competitor to Kalagadi. So there was a change in strategy, and the fact we were a small company meant ArcelorMittal wanted us to can the smelter. We subsequently agreed that the project would continue as described in the shareholders' agreement.

STV: So you took ArcelorMittal to court when it did not want to put more money into this project - and this is the judgment that was handed down - but it is still a major shareholder in Kalagadi, as are you and the IDC. How does this affect your relationships and this huge project?

DM: This didn't start yesterday - it started in 2009. We decided that our funding model would be split 60-40 in terms of debt and equity. The equity we had to inject as shareholders was R4,2bn, and R6,5bn would be debt that we would raise. We had also agreed that the first phase of equity would go in, and then debt and then equity.

From July 2011, ArcelorMittal was informed that we had to inject our equity portions proportional to our shareholdings. Kalahari Resources was supposed to put R400m in, ArcelorMittal R500m and the IDC R100m, which would be R1bn, and then we would draw down on the debt.

We had been trying to convince ArcelorMittal to put the money in. Among the reasons it put forward was that we did not have a CEO and that there were some corporate governance issues.

We said the company was funded by banks that did due diligence - there are 11 German banks in terms of the export credits facility that performed a due diligence, four commercial banks in South Africa and three developmental finance institutions, the Development Bank of Southern Africa, the IDC and the African Development Bank. Standard Bank is the lead arranger and there are RMB and Investec all wanting to fund the project. They have all done their own due diligence and never found any corporate governance issues. We are also audited and we never got a qualified audit.

STV: Are you saying this is a bit of a red herring?

DM: It is a red herring. My view - particularly on the appointment of staff and management being weak - is that weak management will not deliver projects as big as we have delivered to date. The biggest problem is that the management we are talking about comprises black professionals - and many are black women. We started the company because we wanted to deal with stereotypes, with mining having been the domain of men. Sometimes when you do well as a black professional there are those who say, "How did she do it?" These are things that people do not want to talk about, but it's there and it's alive and well.

Look at the project we've delivered: in four weeks we will do coal testing, and the sinter plant is ready, the shaft-sinking has been done. Now we only have to equip it.

STV: But surely you must talk to your biggest partner in this project? How do you resolve the difficulties in this relationship? Can this derail the project or is it on track?

DM: It's irreversible and on track and going ahead. I think ArcelorMittal has accepted that fact - it is the biggest shareholder and will be the biggest benefactor if it succeeds.

STV: How do you improve your working relationship with ArcelorMittal?

DM: Improving the working relationship is easy - just like in a marriage, the fact you fight with your husband does not necessarily mean you starve your children by not letting them eat. That is the first point. As we speak, ArcelorMittal has signed the resolutions for the IDC to put in R150m, and the IDC is transferring R150m into the Kalagadi bank account so that we can continue.

STV: So while you might not like each other very much, that does not put this project in jeopardy?

DM: It does not. In ArcelorMittal's view, if it has the interest of its shareholders at heart, it will continue with the project.

STV: If ArcelorMittal were to sell out because it was not interested in carrying on, how would that affect the project?

DM: It would not affect the project, because if they sell, whoever buys has to also buy the guarantees and all the obligations that were with ArcelorMittal. For us the project continues. We have funding from third parties and banks that are still as committed as ever. We only need the resolutions and corporate guarantees.