miningmx
TODAY In Columnists ›
David Mckay

Mining codes may be changed

David Mckay | Mon, 15 Jun 2009 17:31
[miningmx.com] -- THE South African government has said it is considering amendments to the recently gazetted Codes of Good Practice to the South African Minerals Industry (Codes of Good Practice), a controversial document which critics say fundamentally and ruinously alters the way empowerment is conducted in South Africa.

That's the upshot of a recent meeting with Sandile Nogxina whose contract as director-general for the slimmed-down minerals department has been renewed for another three years. But his acknowledgement that the new minister of mines, Susan Shabangu, would be understanding of industry criticism of the Codes of Good Practice is not without some rancour.

According to Nogxina, the reason the Codes of Good Practice is so unpopular with industry is because it failed to participate in discussions about the document's formulation until the eleventh hour. Even then, says Nogxina, the industry spoke with forked tongue. First though, some background.

I wrote earlier this month that a key problem of the Codes of Good Practice - a guideline document on how to complete empowerment in the industry - was that credits for empowerment when ownership was transferred could only be claimed were the counter party, the empowerment grouping, debt free after two years.

Logically, this is hard to do because, by their nature, mining assets are expensive, capital intensive to grow by expansion, and require a lot of working capital. In an industry where the miners are the price-takers of whatever metal they're mining, it's easy to see why a two-year payback period would make any remaining deals unfinanceable.

Nogxina recognises the point but says that industry repeatedly failed to join his department in meetings, even though they knew of them. "We [government and NUM] invited them, but they never came," says Nogxina.

As late as April, the Chamber of Mines (CoM) approached the minerals department asking Nogxina to personally intervene. A plenary session was hastily convened, involving Zoli Diliza, president of the CoM, and Robbie Lazare - an AngloGold Ashanti executive - who was also representing the industry. Nogxina is adamant compromise agreements were achieved in that meeting.

Days later, however, industry sent legal opinion on the Codes of Good Practice to the minerals department, which Nogxina said, represented a complete reversal of the informal agreements of his plenary session.

Nogxina now believes the CoM has lost the support of its constituency. "I doubt the leadership of the CoM as it currently stands has the authority and constituency. I would rather work directly with the CEOs of the mining companies because clearly I'm wasting my time with the CoM," he says.

Strong words for the CoM, which, incidentally, I have been trying to contact for the last seven days, through its president Sipho Nkosi, who is also CEO of Exxaro Resources.

Yet there is hope. Nogxina believes the Codes of Good Practice can be amended, and that Shabangu, is already considering industry views on how the Codes of Good Practice could be amended.

"The minister would be prepared to give effect to reasonable amendments to the code," he says without actually detailing his definition of "reasonable".

More good news for industry, the Codes of Good Practice is not retrospective so mining companies that have already completed empowerment, won't be subject to the new laws.

Pamodzi Gold

According to one of the Industrial Development Corporation's (IDC's) top bankers, Abel Malinga, the sad and protracted liquidation of Pamodzi Gold could have been avoided.

In a recent meeting, Malinga told me: "It's a pity we were not informed earlier that the R200m in funding (from Best Rock, a fund) was not coming. We could have asked the board for the full R400m in funding that was required," said Malinga.

In January, shareholders, including the IDC, voted in favour of a R400m recapitalisation plan of which half would be supplied in the granting of options to Best Rock. As we know, the recapitalisation never happened.

Malinga said the IDC might have been prepared to supply this funding. I'm not sure why Pamodzi Gold fiddled while the assets burned cash?

Webber Wentzel

After having written about the risks now posed in the gazetted Mines Health and Safety Amendment Act, I was irked to see a press release three days later from attorney Webber Wentzel saying there had been inaccurate reporting on the issue.

It's annoying because the press release affirms the very point I was making adding, only, that CEOs are not yet liable. I think that's only marginally relevant to the discussion. This particular press release was money ill spent by Webber Wentzel which should consider advertising on Miningmx if it's profile it wants.

MORE FROM OUR COLUMNISTS

  • »Barrick chasing Randgold premium
  • »Decoding the Mining Summit
  • »Beware of resource stock overshoot
  • »Power sector needs a revamp
  • »Curious interest in silver, expropriation
  • »Anglo propping up group of six
  • »BEE imbroglio to inform charter debate
  • »Fear and worry, the calling cards of the gold lover
  • »Numsa's Nazi tactics
  • »Vulisango versus Simmers
  • »Impala warns of 'toughest time'
  • »Central Rand Gold to be avoided
  • »Are miners being shafted?
  • »Debt behind Anglo sale
  • »Christo Wiese goes for gold

    • USER COMMENTS () Click to View
    COMMENT
    SHARE
    E-MAIL
    PRINT
    Add Your Comment
    No bad language or hate speech please.

    facebook de.li.cious Digg
    columnists

    Columnists

    MORE FROM OUR COLUMNISTS
  • › Barrick chasing Randgold premium | David McKay
  • › Decoding the Mining Summit | David McKay
  • › Beware of resource stock overshoot | Vic de Klerk
  • › Power sector needs a revamp | Jan de Lange
  • › Curious interest in silver, expropriation | David McKay
  • › Anglo propping up group of six | David McKay
  • › BEE imbroglio to inform charter debate | David McKay
  • › Fear and worry, the calling cards of the gold lover | Richard Quest
  • › Numsa's Nazi tactics | Jan de Lange
  • › Vulisango versus Simmers | Brendan Ryan
    • Most Read
    Commented
    Editor's Choice
    1. »Kumba halts cheap iron ore to ArcelorMittal SA
      by Allan Seccombe | 26 Feb 2010 13:12
    2. »Barrick chasing Randgold premium
      by David McKay | 28 Feb 2010 10:59
    3. »First Uranium soars on tailings news
      by Allan Seccombe | 26 Feb 2010 10:24
    4. »Petra sells diamond for $35.3m
      by Reuters | 26 Feb 2010 12:18
    5. »Barrick chasing Randgold premium
      by David McKay | 28 Feb 2010 10:59
    1. » Kumba halts cheap iron ore to ArcelorMittal SA
      by Kumba halts cheap iron ore to ArcelorMittal SA | 26 Feb 2010 13:12
    2. » Exxaro wants BEE equity changes
      by Exxaro wants BEE equity changes | 25 Feb 2010 16:39
    3. » Aurora defends gold mine plans
      by Aurora defends gold mine plans | 22 Feb 2010 18:07
    4. » Gold Fields lowers gold outlook, again
      by Gold Fields lowers gold outlook, again | 23 Feb 2010 13:38
    5. » Bateman exodus continues
      by Bateman exodus continues | 17 Feb 2010 17:02
    6. » Xstrata pays dividend, upbeat on markets
      by Xstrata pays dividend, upbeat on markets | 08 Feb 2010 10:58
    7. » AngloPlat turns the corner
      by AngloPlat turns the corner | 08 Feb 2010 17:07
    8. » Copper prices destined for record high
      by Copper prices destined for record high | 01 Feb 2010 14:29
    9. » Good prospects for gold
      by Good prospects for gold | 01 Feb 2010 19:30
    10. » Bernard Swanepoel's first platinum play
      by Bernard Swanepoel's first platinum play | 29 Jan 2010 16:43
    11. » Anglo Coal gets out of Venezuela
      by Anglo Coal gets out of Venezuela | 29 Jan 2010 10:37
    12. » Three new coal listings for the JSE
      by Three new coal listings for the JSE | 28 Jan 2010 11:09
    13. » Harmony streamlines ops, targets growth
      by Harmony streamlines ops, targets growth | 26 Jan 2010 09:59
    14. » Simmers settles board battle
      by Simmers settles board battle | 22 Jan 2010 11:43
    15. » Decision time looms at AngloPlat
      by Decision time looms at AngloPlat | 22 Jan 2010 08:40
    16. » Eddie du Rand quits Bateman
      by Eddie du Rand quits Bateman | 15 Jan 2010 13:21
    17. » Aurora buys DRDGOLD's ERPM plant
      by Aurora buys DRDGOLD's ERPM plant | 17 Jan 2010 10:42
    18. » Kazakh firm eyes Mvela
      by Kazakh firm eyes Mvela | 04 Jan 2010 13:41
    19. » Namakwa gets new Lesotho mine
      by Namakwa gets new Lesotho mine | 05 Jan 2010 15:28
    20. » Gold latest in decade of bubbles
      by Gold latest in decade of bubbles | 04 Jan 2010 10:40
    21. » BEE imbroglio to inform charter debate
      by BEE imbroglio to inform charter debate | 18 Dec 2009 08:00
    22. » Solomon regains Wesizwe control
      by Solomon regains Wesizwe control | 17 Dec 2009 15:12
    23. » Aurora says it is financially sound
      by Aurora says it is financially sound | 03 Dec 2009 17:26
    24. » Wesizwe is being "hijacked"
      by Wesizwe is being "hijacked" | 03 Dec 2009 02:00
    25. » DRDGOLD sells Blyvoor to Aurora
      by DRDGOLD sells Blyvoor to Aurora | 02 Dec 2009 15:18
    26. » Exxaro cuts mineral sands for coal
      by Exxaro cuts mineral sands for coal | 01 Dec 2009 17:44
    27. » Bakubung calls for its Wesizwe directors to quit
      by Bakubung calls for its Wesizwe directors to quit | 26 Nov 2009 11:36
    28. » Wesizwe Platinum wracked by coup allegations
      by Wesizwe Platinum wracked by coup allegations | 25 Nov 2009 11:51
    29. » Global gold hedge heads below 10moz
      by Global gold hedge heads below 10moz | 17 Nov 2009 13:34
    30. » Platinum deficit forecast for 2010
      by Platinum deficit forecast for 2010 | 17 Nov 2009 15:03
    31. » Uranium One cuts production target
      by Uranium One cuts production target | 16 Nov 2009 10:12
    32. » Is silver's salvation upon us?
      by Is silver's salvation upon us? | 13 Nov 2009 15:23
    33. » Maroga definitely out - Eskom board
      by Maroga definitely out - Eskom board | 12 Nov 2009 12:56
    34. » Ferrochrome users landed with SA energy costs
      by Ferrochrome users landed with SA energy costs | 12 Nov 2009 12:52
    35. » Eskom: Principle vs power
      by Eskom: Principle vs power | 10 Nov 2009 12:10
    special reports
    News Alert! Subscribe to our Free News Alert
    podcastsPodcasts
    Big opinions by big guys.     RSSRSS Feeds
    News delivered really simply.
    jobsJobs
    Current listings.     eventsEvents
    Current listings.
    jseJSE Listed stocks
    Real time resources data.
    special reportsFREE News Alert!
    Subscribe to our News Alert