[miningmx.com] — ARCELORMITTAL has enough shares in its South African listed subsidiary ArcelorMittal SA (Amsa) to vote through the proposed R9bn empowerment deal with Ayigobi consortium, but it would be one helluva unpopular deal.
At least, that’s what one gathers after the Public Investment Corporation (PIC), representing government investment interests, publicly voiced its disapproval of the deal which numbers the controversial Imperial Crown Trading (ICT) as a beneficiary.
Other institutions, Sanlam and Rand Merchant Bank (RMB) have already indicated the possibility of voting against the deal, but the PIC’s statement earlier this week went somewhat further. It asked of Amsa CEO, Nonkululeko Nyembezi-Heita, why she allowed Amsa’s mineral rights in Sishen Iron Ore Company (SIOC), which it shares with Kumba Iron Ore, to lapse which is, afterall, the root cause of the entire imbroglio.
In failing to protect those mineral rights, Nyembezi-Heita effectively gave ICT the gap to successfully apply for the rights. Having reminded us of that, the PIC then draws a straight line of causality between the lapsed mineral rights and the empowerment deal.
That’s important because Amsa has said there’s no connection, asking us to believe Ayigobi consortium is the kind of empowerment prospect just too good to pass up.
It’s pretty clear Amsa’s BEE deal is not good for South Africa but it’s also worth noting the genesis for the deal was probably in Luxembourg, the HQ where ArcelorMittal CEO and chairperson, Lakshmi Mittal, presides. For his part, Lakshmi seems impassive, in a bad way.
No-one sensitive to the debate about the affordability of South African steel, job preservation in the sector, and the cost of input minerals such as iron ore, would so publicly flout government’s keen interest in broad-based empowerment. Mittal’s position is that of dispassionate outsider rather than involved investor.
Grouped with the CIS and Asia, Africa is the third lowest contributor to ArcelorMittal’s second quarter pretax earnings.
We heard Amsa was trying to reverse out of the transaction, speculation that was sternly denied by Amsa. In fact, Amsa is preparing papers for the JSE detailing the financial effects of the transaction.
If it really is pressing on with this disastrous empowerment deal, either ArcelorMittal has complete indifference to the feelings of minority shareholders, and the country, or important changes to the empowerment deal are in the offing. Hopefully the latter.
De Beers Consolidated Mines
There doesn’t seem to be a mandatory retirement age for chairpersons. Anglo American’s Sir John Parker is 68 years old, for instance. Don Argus, who recently retired as the chairperson of BHP Billiton, is about 72 years.
Nicky Oppenheimer is 65 years old, yet he has called time on his tenure as executive chairperson of De Beers Consolidated Mines (DBCM). One supposes that his retirement from the board merely seals what has been known for a while: DBCM is ex-growth.
That’s stating the obvious given that the company has sold most of its operating assets in a country where it has more than a century of history. Against this background, the departure of Oppenheimer from DBCM seems emblematically significant.
By extension, one wonders how long Nicky Oppenheimer, the grandson of Ernest Oppenheimer, will continue in the executive chairmanship of De Beers Group? It’s also worth asking whether Nicky’s son, Jonathan Oppenheimer, would assume a board position after Nicky’s retirement.
Anglo, the 45% shareholder in De Beers, has not been a supporter of Jonathan which might suggest, like the Menell family in its respective mining company, Anglovaal Mining, active Oppenheimer participation in the affairs of De Beers will stop at three generations.
As for DBCM, I did a reputation audit on it recently and was asked what I thought of the company as a possible multi-commodity entity.
DBCM does have a joint venture to explore for undersea gold in South Africa with AngloGold Ashanti, but beyond that it’s exclusive remit is to mine diamonds from its Venetia mine and the new development Voorspoed, as well as some marine diamond interests.
Anglo is unlikely to support the diversification of De Beers in any event. De Beers is not exactly out of the woods financially.
Sources say the reason DBCM is selling its Finsch mine for instance, possibly to Petra Diamonds, is that it doesn’t have the $400m required to build block caves at the mine.
The listing of De Beers, however, is definitely off the agenda. This has been repeated several times by Anglo and De Beers now, although Gareth Penny, outgoing CEO of De Beers Group, is thought to have wanted the listing. It was one of the several reasons for his departure.
Instead of a separate listing, there seems to be a tightening up of Anglo in respect of its divisions. Anglo Platinum is to be rebranded a division of Anglo Platinum which is reminiscent of its old Amplats brand, or Anglo Platinum Corporation.
Similarly, Kumba Iron Ore is to be branded a division of the London mother ship while any international aspirations it may have had were hit on the head following the purchase of Rio Minas which now represents the sharp end of Anglo’s offshore iron ore ambitions.
