David McKay, executive editor
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» Impala's possible coup throws up questions


Body blow for SA empowerment
David McKay
Posted: Tue, 30 Sep 2008

[miningmx.com] -- I’m sitting in a departure lounge at OR Tambo and have just read about the action on the JSE. 8% down. Yikes, that’s a blood bath, no exaggeration….

Of this, resources were most heavily hit with not even the gold price – safe-haven asset and all that jazz – coming to the party.

Anyway, the market activity gives me the platform to return to an issue I’ve been meaning to address for a couple of weeks now – the proposed corporate activity between Impala Platinum and Mvelaphanda Resources (and Northam Platinum by extension of Mvela’s stake in it).

A banker phoned me recently saying it was outrageous the South African government could stand by while such as transaction proceeded.

The concern is that were, say, Impala Platinum to take over Mvela Resources (and we don’t know the deal structure yet, so I’m just speculating), it would further impact on empowerment in South Africa.

Why? Well, it was in the name of empowerment that saw Anglo Platinum sell its Booysendal platinum project to Mvela Resources in the first place. Now that same asset stands to end up in Impala Platinum’s hands.

How should Anglo Platinum feel about this? Cheated? It could argue that the net result of empowerment is simply to transfer prized assets into the hands of a competitor. It doesn’t exactly incentivise for more such empowerment deals.

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Not that that is possible at present, and here I return to the platinum price and what’s happening on the JSE.

According to a government source with whom I spoke last week, a possible buy-out of Mvela Resources by Impala should be seen in the context of the financial crisis. It’s so difficult raising project capital these days, that empowerment companies are now seeking the relatively safety of a big-brother.

Mvela Resources won’t comment on the matter. It’s issued a cautionary and that’s that. Behind the scenes, however, I’m cautioned to wait for the deal structure which has to acknowledge (protect?) Anglo Platinum’s BEE credits in selling Booysendal. So let’s hold judgement.

But in a related matter, it’s interesting that the South African government is now talking of a state-owned mining company that will own unclaimed mineral rights.

In writing this article, I wondered if nationalisation of mineral rights had been motivated by more leftist elements in South Africa’s rapidly changing government makeup?

However, I was told by a government deep-throat the call for state-owned mineral rights came from empowerment wanabees who couldn’t get a foot in the door through normal commercial means.

Exchange controls may protect South Africa from the credit crisis storm lashing world markets, but goodness me, it seems to be levelling a significant body blow at our empowerment efforts.