SA govt eyes shares in private miners

Allan Seccombe | Tue, 02 Feb 2010 12:20
[miningmx.com] -- SOUTH Africa’s cabinet will discuss a plan for the state to buy shares in the country’s listed and private mining companies operating in minerals it considers strategic.

A decision will be made by March this year whether to go ahead with this strategy to give the state greater control over minerals it regards as important. These include coal, uranium, coal bed methane and others. Precious minerals like gold, platinum and diamonds may be on the cards but these are not top priority.

If the decision is made to go ahead, talks will start with the business sector in the second quarter of this year.

The thinking is the state will acquire either controlling stakes or enough shares to give it representation on the board and thereby influence business decisions like supply and growth, giving it surety about supply of energy minerals.

Asked for comment, Sandile Nogxina, the director general of the department of minerals and energy declined to comment beyond saying: “We are looking at the security of our energy supply.”

The decision to consider taking stakes in energy-related companies was prompted in part by the recent crisis within state power utility Eskom, which in 2008 ran short of coal and couldn’t supply enough power to the mines, causing them to shut for a week.

It’s not immediately clear what the role in this strategy is for the state mining company, which again will be discussed within cabinet. The funding mechanism is also yet to be ironed out. There would need to be a level of integration with the R740bn state-owned Public Investment Corporation (PIC).

The PIC holds a 5.5% stake in Anglo American.

Some may argue this is nationalisation by stealth that mines minister Susan Shabangu was at pains at the Mining Indaba to stress was not a policy of the government. Unlike nationalisation, however, this looks like this will not be a seizure of assets but a buy in.

“In my life time there will be no nationalisation,” Shabangu said at a media briefing after her speech to delegates which promised a quicker turnaround in the processing of mining and prospecting permit applications.

She dismissed the nationalisation of mines calls and debate within the ruling African National Congress’s youth league as young people wanting to “flex their muscles intellectually”.

“But it will not inform government policy and it does not mean change,” she said.

The youth league refused to back down from its nationalisation demands, saying it would happen in the not too distant future.

"If these are really the views of the minister, she is disingenuous, dishonest and does not understand the African National Congress.

"In our internal discussion with Minister Shabangu, she said that she does not disagree with the ANC Youth League, but because she is now trying to impress imperialists, she changes her tone," the league said.

Zoli Diliza, president of the Chamber of Mines, whose members represent about 90% of South Africa’s mineral output, said formal business was unconcerned about the formation of the state miner, which Shabangu said would not be favoured as it competed with the formal sector.

“It’s not something that worries us at all,” Diliza said.

The National Union of Mineworkers, which is a leading player in the ANC-allied Congress of South African Trade Unions (Cosatu), is pushing the transformation agenda hard, arguing after 15 years of democracy management of the mining sector was still dominated by white males.