[miningmx.com] – KUMBA Iron Ore CEO, Norman Mbazima, said this firm would do “everything in its power” to assist Exxaro Resources as it sought to restructure its empowerment interests.
Exxaro is 52% black-controlled and supplies valuable empowerment points to Kumba in which it has a 19% stake. However, the 10-year contract between Exxaro and its empowerment shareholder, MainStreet 333, expires in 2016 which will necessitate a restructuring of interests.
In addition, the heavy decline in the value of Exxaro Resources, and the decline in dividends, partly as a result of Kumba Iron Ore passing its interim dividend recently, has further complicated matters.
Exxaro announced on July 24 that MainStreet 333 would seek a R400m loan from it in order to restructure a R3.8bn preference share scheme and repay half of the loan to Exxaro by selling shares its in the company.
“We have been very happy with the relationship with Exxaro and they have been happy. We have been good for their cash flows and relationship is long dated,” said Mbazima in an interview with Miningmx.
“They have expressed their wish to continue as a BEE owned and controlled company … and we want to be be doing everything possible and will be supportive of them. We are quite mindful of their BEE changes,” said Mbazima.
“We still have time to think about things that we can put in place, but the status quo is the preferred outcome for us and Exxaro,” he said.
Mbazima also said that it was yet to receive a list of conditions ahead of receiving its 21.4% stake in Sishen Iron Ore Company formerly owned by ArcelorMittal South Africa.
Kumba’s rights to the stake was ratified by the Constitutional Court but the shares have yet to be transferred to it by the Department of Mineral Resources (DMR) ahead of likely conditions relating to beneficiation.
“The Constitutional Court did say there could be conditions attached to the stake and the issue of beneficiation will be discussed in the fullness of time [with the DMR], said Mbazima.
“We don’t know what conditions will attach. In the meantime, we can mine what we want to [set out in the SIOC mining right] and that’s given us measure of patience,” he added.
It’s possible that the DMR may ask Kumba to supply iron ore at developmental prices to local business in order to stimulate industrialisation in South Africa although its ability to do this still turns on the outcome of amendments to the Mineral & Petroleum Resources Development Act (MPRDA) which were recalled shortly before promulgation this year.
