DOMINION Reefs is a vast, rectangular expanse of granite overlain by uranium and gold-bearing quartz reefs located about 40km southwest of Klerksdorp, in the North West. For the past six years, it has been the playground of the Gupta family, in a deal that to date has in effect cost them next to nothing, but is likely to end up losing the state hundreds of millions of rand.

The centrepiece of the family’s interest is a mine called Dominion Rietkuil Uranium, which has passed through numerous hands before landing up in those of the Guptas in April 2010, at which point they renamed it Shiva Uranium.

The Guptas, with a group of African National Congress-connected black economic empowerment minority shareholders, including one called Mabengela, bought the mine for their Oakbay Resources and Energy company.

Mabengela is owned by President Jacob Zuma’s son, Duduzane, and the youngest of the Gupta brothers, Rajesh “Tony” Gupta.

The Guptas got Shiva Uranium for a steal — $37.3m (R275m at that time), which represented a loss of about $242m for the previous owners, a Canadian company called Uranium One that had mothballed it because it couldn’t mine it profitably.

What made the deal possible for the Guptas was a R250m loan from the state-owned Industrial Development Corporation (IDC), eased, it is said, by some presidential intervention. Add to that three more substantial loans from several South African banks (all of which have since closed Oakbay’s accounts) and it becomes clear that the Guptas didn’t need to put up any money of their own to acquire what is said to be one of the world’s biggest uranium mines.

The IDC loan was due to be repaid in April 2013, but wasn’t, presumably because Oakbay, too, was having difficulty operating the mine profitably.

A year later, the IDC agreed to write off the loan, plus interest, in exchange for a minuscule 3.7% shareholding in Oakbay. Why the IDC did a deal so advantageous to the Guptas remains puzzling.

But there is a snag in what would, otherwise, appear to be the mining scoop of the century for the Guptas. According to veteran mining and civil engineer Peter Skeat, who once owned this mine, he was forced to conclude, after years of investigation, that the vast amount of uranium there cannot be mined and produced profitably at free market prices because the grade is too low.

In other words, big though it is, the Shiva mine is a dud. “I bought the mine from the Anglo American Corporation, which had owned it before the Canadians,” Skeat explains. “Anglo had spent millions on massive exploration and tests in the 1980s, before eventually deciding they could not support giving the go-ahead for the mining of the deposit as the operation would be marginal.”

Skeat showed me an Anglo report on the mine’s uranium deposits, which he has dubbed “the silver bible” on Dominion because of its meticulous detail and fine silver binding. In it, nine leading geologists signed off the results of the Anglo exploration programme that was implemented at Dominion. This report illustrates the low grades of uranium found in the Dominion reefs, which lead directly to the high cost of production there.

“I bought the mine in 1997,” he says, “because I’d had a lot of experience making small operations succeed, so I thought I’d stand a better chance than a big outfit like Anglo to make this one work.

“We built a successful gold operation on the gold side, being awarded the best performing gold share for that year, while we continued evaluating Dominion until we eventually accepted that it was unviable at the prevailing uranium prices.”

Skeat’s figures are daunting. The mine’s uranium ore, he explains, averages about 0.33kg to the tonne. Indirectly, this causes production to cost more than $100 to the pound. Yet, the average market price of uranium in the past 30 years has been less than half that. The current price in the latest Mining Journal is $28.25.

The low market price is because uranium is a fairly common mineral and there is a large oversupply. “There is an enormous amount of uranium in this mine,” Skeat says, “but it’s like sand in the Sahara.”

He derisively reckons the mine’s real value is one dollar — for its grazing rights.

So, why did the Guptas buy the Shiva Uranium mine? Skeat thinks it is because their business experience is in the retail sector and they just don’t understand mining. But there could be another reason. This relates to the fact that the Gupta and Zuma families are working together in a symbiotic relationship, each helping the other grow rich. As part of this relationship, Zuma has been cosying up to Russian President Vladimir Putin, trying to set up a deal that would see Rosatom, the Russian state-owned nuclear company, build six to eight nuclear power stations for Eskom.

The expectation, no doubt, is that Shiva Uranium would provide the fuel for those nuclear power stations to generate the power we are going to need in the next 20-30 years. In that case, the Guptas would make a killing on their investment.

So, too, would the Zumas, thanks to their shareholding through Mabengela, which seems to be the vehicle for the Zuma family’s share in the Guptas’ state capture enterprises. What one might call the family’s Zuptamobile.

We know Zuma has visited Russia five times for discussions with both Putin and his predecessor Dmitry Medvedev, that his Cabinet has agreed that SA’s projected future electricity demand requires 9,600MW of nuclear-generated power; and papers produced in a court case revealed that Energy Minister Tina Joemat-Pettersson had drawn up a draft deal with Russia to buy those nuclear reactors.

Several nuclear specialists have estimated that the deal would cost the Treasury about R1-trillion. There are strong indications that both of our recent ministers of finance, Pravin Gordhan and Nhlanhla Nene considered the cost to be unaffordable and refused to authorise the expenditure — which is why Zuma first moved Gordhan to a lesser portfolio, then fired Nene.

That heedless act landed the country in a financial pickle. As the whole dodgy deal begins to unravel, the Guptas have left the country — flying to the notoriously lax financial centre of Dubai and taking with them a huge amount of luggage, some of which was rumoured to have been packed with cash.

Was any of that IDC money? We just don’t know. But in the prevailing chaos one thing seems clear. The IDC has surely lost hundreds of millions of rand on the deal, and that is our money. It is we, the taxpayers, who have lost out. As have the Oakbay employees who can’t be paid because the banks have shut down on the company.

Meanwhile, Zuma remains president. He has lost nothing on this latest addition to his appalling list of scandals.

• Sparks is a former editor of the Rand Daily Mail