[miningmx.com] — SOUTH Africa’s largest copper miner Palabora Mining Company said on Monday it is to sell 26% of its operations to a broad-based BEE group comprising of employees, the community and key individuals. A significant feature of the transaction is its focus on community development.
On 30 April, the group, which is partly owned by Rio Tinto Group signed and submitted a Transaction Framework Agreement (TFA) bearing the signatures of its Broad-Based Black Economic Empowerment (BBBEE) partners to the Department of Minerals and Energy (DME) in Polokwane.
Palabora signed the TFA with the five tribes of the Ba-Phalaborwa community. A community trust to be held for the benefit of Makhushane, Selwane, Maseke, Mashishimale, and Majeje tribes will acquire 10% of the equity in a newly formed, special purpose subsidiary of Palabora, which subsidiary will acquire all or an appropriate part of Palabora’s business under the transaction.
The host communities will not be required to contribute upfront equity for their stake in the subsidiary of Palabora as the transaction is being vendor-financed by Palabora.
Palabora Mining Company MD Matt Gili said: “We are delighted that this long and thorough process is closer to completion and that further benefits will flow to the communities from completion of the transaction. In addition to this, Palabora will continue to be a major contributor to the Phalaborwa economy.
“Palabora paid 235 million rand in corporate tax during 2008 and spent 2.6 billion with suppliers of which 1.1 billion rand was with BBBEE companies. Approximately 964 million rand of the company’s supplier spend was in the Ba-Phalaborwa area, with 679 million rand going to BEE enterprises.
Palabora will continue its Corporate Social Responsibility programmes through the Palabora Foundation to assist local communities within a 50km radius of Phalaborwa to become self-reliant through sustainable development programmes.
“The Palabora Foundation has a budget of 35.9 million rand for this year, of which 65% will be spent on education programmes to benefit the local community”, he said.
According to Palabora, it is intended that the transaction will result in an enduring and sustainable BBBEE transaction and ensure that Palabora and accordingly the business, immediately comply with all the equity ownership of the mining charter thereby fulfilling the 26% target set for 2014 and exceeding the 15% target set for 2009.
All Palabora’s approximately 2,200 permanent employees will participate in the Employee Share Participation Trust (ESPT). The ESPT will acquire a 10% equity interest in the subsidiary of Palabora.
Chief financial officer of Palabora Charles Asubonten said: “While this transaction has been a real balancing act, Palabora seeks to implement a transaction meeting both the letter and the spirit of the Mining Charter.
We’ll continue to optimise value for our existing and incoming shareholders at both the listed company and operating subsidiary levels.”
At about 13.40 Palabora Mining Company had given up 3.09 rand to 58.75 rand on the JSE.