The deal gives Mr Duduzane and the Guptas a stake in global steel giant ArcelorMittal worth more than ZAR 3 billion.
The Mandumo Investment Holdings consortium was led by Mbete, who was deputy president at the time, and included Mvelaphanda Holdings chairman Mikki Xayiya and IT mogul Robert Gumede.
Mandumo was the front runner for the deal, on terms considerably more favourable to ArcelorMittal shareholders than the Gupta-Zuma consortium, as it would have brought a cash injection of ZAR 375 million, mostly funded by Mvela.
Two Mandumo insiders said ArcelorMittal's head office in London had put pressure on the consortium to include the Guptas in the deal. But, at a meeting soon afterwards, all its members had voted unanimously to walk away.
Gumede and Xayiya declined to comment on the issue.
Mandumo CEO Brian Mosehla, speaking on behalf of Mbete, Mvela and Gumede, denied that the consortium had pulled out of the deal because of the Guptas' involvement. He said that "The proposed structure resulted in unhealthy returns for all parties involved. The Mandumo board resolved not to proceed with the transaction."
A source close to Mvela said the economics didn't make sense, especially considering that it would pitch the company against Anglo American, whose subsidiary company Kumba is engaged in a court dispute over prospecting rights worth billions of rands at its Sishen Iron Ore Mine with Imperial Crown Trading a company linked to the Gupta-Zuma consortium.