Philip Baum, acting CEO of Anglo American SA
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Samancor adds resources in BEE deal
Allan Seccombe
Posted: Tue, 11 Dec 2007

[miningmx.com] -- BHP Billiton and Anglo American’s manganese 60:40 joint venture Samancor is vending its mines and resources into a new company, adding new resources from the Ntsimbintle empowerment group to give its South African mining operations a longer life.

The new company called Hotazel Manganese Mines (HMM) will be 91% owned by Samancor and nine percent held by the consortium made up by Saki Macozoma’s Safika Resources, women’s empowerment group Wiphold and a number of community groupings and trusts.

Both parties declined to put a value on the transaction, which adds contiguous manganese prospects to Samancor’s two mines, or say how many more resources or years of life have been added to the existing projects.

Samancor has resources of 90 million tonnes and produces three million tonnes a year of ore and other beneficiated products.

Manganese deposits are relatively easy to predict, so despite neither party able to say how many tonnes of manganese resources have been added to HMM by Ntsimbintle, there was enough confidence in the geology to give the empowerment partner nine percent of the new company.

The contiguous resources from Ntsimbintle are best exploited from Samancor's infrastructure and would not be financially viable as standalone projects.

Growth in the sector is constrained by limited rail capacity to the country’s eastern harbour at Port Elizabeth and the new port at the Coega industrial development zone, said Peter Beaven, the president of BHP Billiton Manganese.

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“We’ve got a great asset base that we’ve just made greater,” Beaven told a media conference in Johannesburg.

“We’ve got some good partners who will add some muscle to our ability to get things done in this country.”

Macozoma worked at Transnet six or seven years ago and could play an instrumental role in negotiations between HMM and the state rail utility in increasing capacity on the line to facilitate expansion of the projects and increase exports.

The transaction took four years to conclude. The deal awaits ministerial approval before it will be finalised.

Samancor is in talks with another party to raise empowerment to 15% to meet the first target date of 2009, but Beaven declined to say who the other parties are and when the deal will be concluded.

"Anglo American's efforts have gone beyond compliance, as empowerment is not only an important business imperative, but a demonstration of our commitment to the advancement of communities where we do business," said Philip Baum, acting CEO of Anglo South Africa.

Ntsimbintle has three other manganese projects awaiting new order prospecting rights. It has sunk about 30 holes in these. The plan is over the next five to 10 years is to develop a standalone mine, but much depends on rail capacity, commodity prices and the quality of the prospects.

Ntsimbintle will have immediate access to nine percent of profits. There is no debt in the transaction.