[miningmx.com] – IT’S approaching a year since the Department of Public Enterprises (DPE) announced plans to launch a fund in association with Eskom aimed at encouraging start-up, black-owned coal companies.
At the time, public enterprises minister, Malusi Gigaba, termed the initiative a game-changer. He also asked for urgent action. There was no time to waste regaled Brian Dames, Eskom CEO.
As we all know, Eskom is desperately short of coal from about 2018. Speaking in December last year, Dames said of the four billion tonnes (bt) needed in coal between now and 2040, just over half had not been contracted. It is hoped that half of that – roughly 1.2bt – could be sourced from black-owned junior mining companies, and by consolidating existing ones in need of capital.
Eskom’s private equity partner, Vunani, is known to be designing the fund, but there’s been little in the way of actual results as yet. No doubt, Malusi and Dames will be reminded of just how difficult it can be to raise capital for mines in an era of regulatory uncertainty.
However, Thebe Investment Corporation – which describes itself as South Africa’s oldest empowerment company – may be riding in to the rescue. According to Bevan Jones, the newly appointed CEO of the corporation’s Thebe Mining Incubator, there are plans for a junior mining fund that could eventually see billions of rands in investment deployed.
“Although there are a number of entities currently trying to consolidate the coal market, some especially in regards to majority BEE ownership, we don’t believe that anyone has thought this through to the degree that Thebe has,’ says Jones.
“Thebe has developed various viable entities that can take a project from concept stage right through to mining house,’ says Jones who was previously a co-founder of globalCOAL in London, the online physical marketplace for global coal markets. Jones was also GM of London Commodity Brokers’ Johannesburg office which is launching a physical coal futures market on the JSE.
“Through clever use of funding Thebe is also able to offer a sustainable return to investors at each stage whilst ensuring that the initial mining entrepreneur and/or community stays invested to realise the true value at the end, albeit a smaller piece of a much bigger pie,’ he says.
Thebe, which has some R5.5bn in assets under management, was established in 1992 and has a 47.5% shareholder in Batho Batho Trust which was established by ANC stalwarts Nelson Mandela and the late Walter Sisulu.
Its exposure to the mining sector has been small in the past but a new division, Thebe Mining Resources, was formed in 2009 and recently took a majority investment in Reatile Timrite which supplies about 40% of the underground mining timber support to the gold and platinum sectors.
Jacques de Wet, interim CEO of Thebe Mining Resources told BDLive in August that the Thebe subsidiary was “. also exploring opportunities outside of Timrite’s traditional gold and platinum sectors with a focus on the coal sector’.
“The incubator identifies and develops mining entrepreneurs and invests in their projects,’ says Jones. It then acts as “. a responsible project developer, contracting the most cost effective service providers and ensuring that every rand is spent on adding value to the project and ultimately goes toward the creation of jobs and opportunities for the local community.
“The incubator has developed an effective training programme which every mining entrepreneur undertakes and there is a well defined journey that the incubator undergoes with every project through initial identification of the resource, through to obtaining the relevant licenses and undertaking an exploration and pre-feasibility programme,’ he said.
Once the entrepreneur has completed the incubator programme then Thebe’s range of commodity funds can invest further in the project, effectively buying out the incubator’s stake to enable sustainability of the incubator in order to invest in further emerging BEE miners.
The relevant commodity fund such as Thebe’s Coal Fund will then pool further investment funds to enable the project to reach bankable feasibility stage and ultimately to build and operate the mine and market and sell its production.
