Zwane ‘energised’ by Codelco to establish state-owned miner

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SA mines minister, Mosebenzi Zwane Pic: Martin Rhodes

SOUTH African mines minister, Mosebenzi Zwane, is to accelerate the establishment of a new standalone state-owned mining company after claiming to have been “energised” by a visit to Chile’s Codelco.

Commenting after a two-day investor roadshow in the South American country, Zwane said: “We also visited the state-owned mining company, Codelco, and we are energised to come back to South Africa and accelerate the establishment of our own state-owned mining company which has been discussed for a while now”.

Zwane added that investors welcomed the “… frank and open manner” in which discussions were held regarding the recently gazetted Mining Charter redraft. Investors had “.. committed to partnering with us to invest in the South African mining sector,” he said.

Codelco, or the National Copper Corporation of Chile, was established in 1976 after copper mines were nationalised in Chile in 1971. With production of 1.8 million tonnes in its 2016 financial year, it is one of the largest copper producers in the world. It posted a pre-tax profit for the year of $435m following the previous year’s historic loss of $2.19bn.

During the roadshow, Zwane attended the Investing in Latin American Mining Cumbre, a conference convened by the organisers of the Mining Indaba conference. A memorandum of understanding (MoU) was also signed with Chilean mines minister, Aurora Williams. “The very next day our respective teams were meeting to start with the implementation of the MoU,” Zwane said.

In his State of the Nation Address in February, South African president, Jacob Zuma, said a bill to form a state-owned mining company would be presented to cabinet and parliament this year. The bill refers to the State Owned Mining Company (SOMCO) bill which was floated during the period Ngoako Ramatlhodi was the country’s mines minister.

Ramatlhodi said in an address in July 2014, that SOMCO was “… one of the critical instruments of the democratic developmental state” that would lead to “… greater participation by the state in the mainstream economy”. No further details of the proposed bill were provided by Zuma.

Currently, the government has involvement in mining through a number of different entities including the African Exploration & Mining Finance Company (AEMFC), a company held in the Central Energy Fund but which is to be transferred to the Department of Mineral Resources (DMR).

The AEMFC is essentially a coal mining company. It sold about 1.5 million tonnes to Eskom from its Vlakfontein mine in Mpumalanga province and had plans to double supply this year in order to supply Kusile, Eskom’s new power station.

In addition to expanding the Vlakfontein operations, AEMFC is also conducting pre-feasibility studies for another coal mine, Klippoortjie, some 40km from its existing operations.

Seam 5 of AEMFC’s so-called T Project coal mine – 12km north of Kinross in Mpumalanga – is suitable for crude oil production and the company said it would be looking for market interest in this.

AEMFC is also doing exploration to mine iron ore in the Piet Retief area and limestone in Tosca. Besides Mpumalanga the company also has prospecting rights in KwaZulu-Natal, Northwest and the Northern Cape provinces.

6 COMMENTS

  1. Knock yourself out Minister Zwane. Enjoy. Use the same business model as Eskom, SAA, and the SABC, all highly successful and profitable businesses under the steadying hand of the ANC.

  2. May I ask who is the BEE partner for the State Owned company? As you know Government do not qualify as HDSA. Therefore if no BEE company is involved, the state owned mining company should receive a section 47 notice for non compliance on current mining operations. Further more, they should have been refused Mining Rights from the start due to non compliance with statutory 26% BEE for Mining Rights.
    Any journalists willing to investigate this mess?

  3. Will 20% of every dividend issue be guaranteed on a no-questions-asked basis to the military (dictatorship) as they were under Pinochet? Or do we have other beneficiaries in mind?

  4. I agree with JSE Cynic. Mr Zupta Zwane neglected to notice that the government of Chile did not start off the business model by chasing away everyone from Spanish descent and reserved all jobs and “favours” for historically disadvantaged indigenous Chileans, thereby destroying centuries of knowledge and experience… You will find that this will make quite a difference mr Zupta Zwane… This is just another conduit that have been identified to siphon money from the treasury into the private jets of a few selected individuals…

  5. The IDC also invests in various mining projects. I wonder why these aren’t counted when the government discusses the fact that it is not included in the mining sector? Perhaps becuase the IDC mine ownership does not allow politicians control over tender processes and the ability to steal more money?

  6. DMR do not regard IDC as an empowered entity. IDC is an organ of State. In terms of Mining Codes of good practice, shareholding in a measured entity by State or organ of state such as and IDC must be excluded

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