[miningmx.com] – 2015 is less than two weeks old but already questions are being asked of Tshediso Matona’s Eskom which announced last week that it would have to return to load-shedding.
Here’s the low-down on other people in the mining sector who will most likely occupy the column centimetres this year.
Mark Cutifani, CEO, Anglo American
Cutifani bought himself time in October saying his efforts to breathe new life into the UK-listed group would not be recognised by the market for 12 months at least, but April will mark two years he has been in the hot seat. That means investors will be keeping a beady eye on returns when the company posts its interim figures in July or August. The 2014 full year results are due on February 13.
They’ll also want to see an acceleration in the group’s restructuring with particular emphasis falling on the copper mines in South America and marginal assets in listed subsidiary, Anglo American Platinum. The latter could be a struggle. According to reports, Amplats values its Union mine, which is up for sale, at $300m – far in excess of estimates by buyers, thought to number about ten.
With an iron ore market unlikely to come to Anglo’s assistance, they’ll also be attention on Minas Rio, the heavily expensive iron ore mine in Brazil that Cutifani said would be a cash spinner of note.
There was always a view that Anglo could “get to’ Cutifani before he got to Anglo. 2015 may demonstate whether he’s winning the day or whether his tenure will be the last of any CEO in the group’s history with possible predators sniffing Anglo for signs of a cheap takeover.
Graham Kerr, CEO-elect, BHP Billiton Spinco
Spinco. Crapco. Little Billiton. These are the sobriquets applied to the assets that BHP Billiton plans to demerge in the course of 2015; many of them situated in South Africa. The job of Graham Kerr, BHP Billiton’s current CFO, will be to put these assets back on the map, and show why they have an investment case worthy of development rather than a trade sale.
The cynical view is that the demerged company, officially named South32, will become a target for a takeover anyway. Kerr, however, says the coal assets in South Africa and Australia, the manganese in South Africa, and the Australian and Brazilian aluminium assets will flourish once they have the attention and capital they could not be afforded in the greater BHP Billiton.
One possible early headwind will be the behaviour of UK shareholders in the company. Investors asked that the company have a listing in London – it was previously only planned to float in Perth and Johannesburg – suggesting that good assets, even in risky geographies have attract investment dibs. However, it’s thought they may sell the stock in lieu of a substantial share buy-back that was expected of BHP Billiton in 2014.
Ngoako Ramatlhodi, mines minister, South Africa
Ramathlodi burst on to the South African mining scene with refreshing brio after several years of former mines minister Susan Shabangu’s slap-stroke approach to the miners that left them dazed and confused. He attempted to broker peace between AMCU and the platinum miners – even claiming his efforts were a turning point in the wage negotiations – and then said he’s asked for amendments to centrepiece mines legislation to be recalled to Parliament.
Stern tests await Ramatlhodi, however.
2015 represents the beginning of an audit into mining charter compliance which will call for some simply massive, and somewhat complex, calls on technical and principle aspects of the country’s empowerment legislation. He must also plot a way forward for mining companies in terms of how BEE laws will be progressed in the coming years.
There’s also a worrying degree of backlog in the awards of mining and prospecting licences in his department that proposed changes to the MPRDA were supposed to address. He must now give his department the impetus to de-bottleneck its licensing and permitting procedures even though law changes to implement them will be delayed. That’ll be hard.
Finally, how does he address petroleum and gas legislation? Initially wrapped into the MPRDA amendments, he must steer parliament on whether the proposed 20% free carried interest allowed to the South African government is going to send the correct message that South Africa is serious about its energy sector.
Phuthuma Nhleko, chairman, Pembani
Having pressed ahead with the combination of his Pembani with Shanduka Group, the question now will be whether the former MTN boss takes the plunge into South Africa’s chilly mining sector. That’s the obvious corporate move of having combined the two businesses into a R13.5bn diversified business.
What’s noticeable about the two companies is a strong presence in the energy markets, among others. Pembani has investments in Engen, BHP Energy Coal South Africa, and Exxaro Resources while Shanduka is in joint venture with Glencore on South African coal assets.
There are bits and pieces in Shanduka in particular that if retained in the combined entity would make it look unfocused and an illogical fit with Pembani. For instance, Shanduka has interests in property as well as MacDonald’s and Coca-Cola Shanduka Beverages.
Shanduka has long fielded questions over whether it would go public with ambivalence and avoidance even. Perhaps, with a stated ambition of becoming more involved in sub-Saharan Africa, and with commodity prices at cyclical lows, 2015 would be a good time to come to the capital markets with a new mining offering?
Tshediso Matona, CEO, Eskom
Possibly the worst job on the planet, Matona has converted from politics into business, although it must be said that Eskom is a political minefield. At the time of writing, there’s uncertainty as to whether the current board will survive the New Year hangover
First up, is stabilising the utility’s balance sheet where cash is being burned at a greater rate of knots than coal in its power stations. Second is getting the first unit of the 4,800MW Medupi power station project operating before the full chill of winter sets in. Third, signing up as much coal as it can lay its hands on given the fact that of the proposed four billion tonnes of expected coal burn by 2040, only half is actually contracted from miners.
Matona has a big part of South Africa’s morale in his palm because nothing says social failure more than that moment when the lights, the fridge, the TV showing test cricket, and of course the wheels of big business, just grind to a depressing halt.
