[miningmx.com] – ANGLO American would have made a series of advances in its business relationships in South Africa including reaching an agreement with ArcelorMittal SA (AMSA) on an iron ore pricing agreement, said Mark Cutifani, CEO of the London- and Johannesburg-listed mining group.
“We will have ticked a number of boxes by the end of the year,” he said in an interview shortly after announcing the group had added a fifth fund – Sebenza – to its enterprise development arm, Zimele, in which it and the Development Bank of SA would plough a combined R500m into creating 8,000 new jobs.
One of the conversations still to be had before signing a new iron ore supply agreement between its listed subsidiary, Kumba Iron Ore, and AMSA was how to secure the support of the South African government. It is likely to express an interest in a developmental pricing arrangement between the two companies.
Anglo said on September 27 that it had engaged AMSA in face-to-face discussions on a new iron ore deal as an alternative to formal arbitration – a development that Cutifani said today demonstrated how the group intended to overcome business and regulatory headwinds in South Africa.
In the case of its platinum subsidiary, Anglo American Platinum (Amplats), the group had achieved an outcome that had accommodated government’s concerns whilst ending in the same result envisaged in the planned restructuring, he said.
“I think we need to get to a situation earlier instead of having discussions when they are a crisis,” he said of the various conflicts in which Anglo, and the mining sector, had found themselves in with government. “Owing to the gap in trust, the issues that we think are serious are actually not so serious,” he said. He promised other advances in the group’s relationship with the South African government.
Commenting on discussions regarding proposed amendments to the Minerals & Petroleum Resources Development Act (MPRDA), Cutifani said: “About 80% of the problems of the MPRDA have been solved in bilaterals [discussions through the Chamber of Mines of SA]”.
He added, however, that mining industry objections to Section 26 of the MPRDA which deals with beneficiation, were still current. This is the proposed amendment that would allow the mines minister to declare certain minerals strategic and designated.
Enoch Godongwana, chairperson of the ANC’s economic transformation committee, said at the Joburg Indaba earlier this week that it was not the government’s intention to influence pricing of strategic or designated minerals such as coal or iron ore. However, legal experts have been critical of the policy uncertainty created by sheer dint of allowing ministerial discretion in Section 26.
Cutifani said at the group’s interim results announcement on July 26 that the relationship with the South African government would have to change. “I don’t know where the conversation will go; it is not a time-bound conversation. But a different model is required,” he said.
The most recent knocking of heads with the government and the mining sector has been the criticism levelled at Anglo’s rival BHP Billiton by Transnet CEO, Brian Molefe, who accused the Anglo-Australian miner of letting down black-owned coal companies by refusing to allow them additional access to the Richards Bay Coal Terminal. BHP and Anglo are both shareholders in the terminal.
“I don’t know what happened in the meeting between Brian [Molefe] and BHP Billiton, but I think Mike [Teke, chairperson of RBCT] made an excellent response on the matter,” said Cutifani. Teke last week pointed out that RBCT could not be considered a state asset, as contended by Molefe, because billions of rands had been ploughed into its development some of which benefited black-owned coal mining companies.
