Mines law recall ‘stopped SA going backward’

[miningmx.com] – MARK Cutifani, CEO of Anglo American, said the call by South African mines minister Ngoako Ramatlhodi to review amendments to minerals legislation had “stopped the country from going backward’.

Responding to questions following publication of Anglo’s results for the six months ended June, Cutifani said a provision in the amendments allowing the South African government to seize control of oil and gas assets “was a concern for me’.

“I was encouraged that he [Ramatlhodi] opened it up and looked at the oil and gas. That was a concern for me. I was worried that South Africa was going backwards. He took feedback on board,’ said Cutifani.

Cutifani was a member of the negotiating committee from the Chamber of Mines which had helped develop the bill. He said that he was happy with the changes that had been agreed in respect of mining. The oil and gas clauses in the amendments did not fall under the negotiating powers of the chamber.

In June, barely a month after his appointment to the mines ministry, Ramatlhodi asked South African president Jacob Zuma not to sign the Mineral & Petroleum Resources Development Amendment bill into law even though they had been approved by parliament in February.

“I have sent a request to the Presidency via my director-general to hold onto the act,’ Ramatlhodi was quoted to have said at the time. “We’ve got to simplify the laws to make things easy for investors to move in. We make the processes easy so that we encourage people to invest,’ he said.

Ramatlhodi later commented that as part of recalling the proposed amendments, he would also consider raising empowerment levels – a step that Cutifani said today would be retrograde.

“I certainly wouldn’t expect to see targets changed from the mining charter. We can’t change the rules midway through so I expect there will be a sensible conversation so that South African can become a good investment,’ said Cutifani.

The mining charter, which is now part of the existing Mineral & Petroleum Resources Development Act, promulgated in 2004, stipulates among other things a requirement for mining companies to empower 26% of their equity or units of production by 2014.

There has been conflicts, however, with separate empowerment legislation guided by the Department of Trade and Industry in which the empowerment target is set at 50% plus one share.

Eskom, the South African power utility, falls under this legislation because the ministry to which it reports, the public enterprises department, recognises the DTI’s legislation.

As a result, Eskom has asked Anglo American to empower its assets supplying coal to it to 50% plus one share. Cutifani said that the group would comply with this in respect of a coal supply agreement between its New Largo project, which is now at feasibility-gate level, and Kusile, Eskom’s 4,800MW power station due to start operating in 2017.

Said Cutifani: “We are very open and we are committed to reducing holding down to less than 50% in line with transformation targets. We are aligned on the major points with Eskom that they have requested.

“Eskom has changed its position at least twice over three years, which can happen as new ministers come in with new parameters,’ said Cutifani. “We have again adjusted. We are in line, but some details that need to be sorted through,’ he said.

Eskom chairman, Zola Tsotsi, said at Eskom’s full-year results presentation on July 11, that the utility and Anglo American had signed a memorandum of understanding in respect of the coal supply agreement.

He earlier told Miningmx that there had been uncertainty within Anglo American regarding its outlook on changing its empowerment commitments. Anglo’s New Largo project is 26% empowered through the Inyosi Consortium.

Zola said that Cutifani had agreed to changes but that other members of his management team were not committed to the changes. “We are having an almightly battle with Anglo,” Tsotsi said at the time.