Jacinto Rocha, director of licensing, DME
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SA state-owned mine firm plans revealed
Allan Seccombe
Posted: Wed, 08 Oct 2008

[miningmx.com] -- THE South African government is re-activating a dormant state-owned mining company to begin buying and operating assets in the mineral sector to secure stakes in strategic commodities, said Jacinto Rocha deputy director general of mineral and energy affairs.

The 60-year-old company called African Exploration, Finance and Mining Corporation falls under the state-owned Central Energy Fund (CEF), the owners and operator of PetroSA, which has extracts gas and converts it to liquid fuel.

“The company has been there since 1944 or 1948. We are reviving it. It is not a new creation,” Rocha told Miningmx on the sidelines of a discussion on the future of South African mining at the Gordon Institute of Business Science.
The issue is not about competing
“We will launch the company in the near future."

The company does not yet operate any assets and Rocha declined to be drawn on its funding. It has a chief executive, but again Rocha declined to name the person.

However, the CEF website names the chief executive as Sizwe Madondo, and that the company holds prospecting rights for coal in Witbank, Wakkerstroom and Bethal for which it has submitted applications for mining rights.

The CEF has provided funding of R180m for three years of exploration. Uranium mineral rights owned by another state entity could be transferred to African Exploration, Finance and Mining Corporation fairly soon.

“Our framework of operation is completely different from the private sector and our business will not just be a return on investments, but creating a sustainable, strategic business,” Rocha said.

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“The issue is not about competing with the existing companies in the mining sector but to become involved in it, in the same way there are state-owned oil companies and private oil companies. They are not competing, but involved in the same sector,” he said.

The minerals on the radar are coal, uranium, platinum, gold, diamonds and base metals, basically the broad spectrum of South African mineral wealth.

On the coal front, the intention is to create a company that will supply state-owned power utility Eskom, which experienced a severe shortage of coal, contributing to massive power shortages in January that shut the mining sector for a week.

It has rebuilt stockpiles, but had to strike up short-term contracts, which were far more expensive than the long-term contracts it has with coal mines.

“The state can be a coal supplier of last or first resort. Our interest would be not to fight Eskom over prices but to supply coal for energy purposes. We will operate in a way in terms of what we want from the minerals that we mine,” Rocha said.

Asked about the state’s interest in platinum, a precious and industrial metal, he argued because South Africa is the largest source of the metal it would be in its best interests to have a stake in the production of it.

There will be no nationalisation of assets already owned by private companies, or the taking away of any company’s rights, he said.

Rocha said the company would fall under the rules and regulations laid out in the Minerals and Petroleum Resources Development Act enacted in 2005.