[miningmx.com] — THE South African government has said it is considering amendments to the recently gazetted Codes of Good Practice to the South African Minerals Industry (Codes of Good Practice), a controversial document which critics say fundamentally and ruinously alters the way empowerment is conducted in South Africa.
That’s the upshot of a recent meeting with Sandile Nogxina whose contract as director-general for the slimmed-down minerals department has been renewed for another three years. But his acknowledgement that the new minister of mines, Susan Shabangu, would be understanding of industry criticism of the Codes of Good Practice is not without some rancour.
According to Nogxina, the reason the Codes of Good Practice is so unpopular with industry is because it failed to participate in discussions about the document’s formulation until the eleventh hour. Even then, says Nogxina, the industry spoke with forked tongue. First though, some background.
I wrote earlier this month that a key problem of the Codes of Good Practice – a guideline document on how to complete empowerment in the industry – was that credits for empowerment when ownership was transferred could only be claimed were the counter party, the empowerment grouping, debt free after two years.
Logically, this is hard to do because, by their nature, mining assets are expensive, capital intensive to grow by expansion, and require a lot of working capital. In an industry where the miners are the price-takers of whatever metal they’re mining, it’s easy to see why a two-year payback period would make any remaining deals unfinanceable.
Nogxina recognises the point but says that industry repeatedly failed to join his department in meetings, even though they knew of them. “We [government and NUM] invited them, but they never came,” says Nogxina.
As late as April, the Chamber of Mines (CoM) approached the minerals department asking Nogxina to personally intervene. A plenary session was hastily convened, involving Zoli Diliza, president of the CoM, and Robbie Lazare – an AngloGold Ashanti executive – who was also representing the industry. Nogxina is adamant compromise agreements were achieved in that meeting.
Days later, however, industry sent legal opinion on the Codes of Good Practice to the minerals department, which Nogxina said, represented a complete reversal of the informal agreements of his plenary session.
Nogxina now believes the CoM has lost the support of its constituency. “I doubt the leadership of the CoM as it currently stands has the authority and constituency. I would rather work directly with the CEOs of the mining companies because clearly I’m wasting my time with the CoM,” he says.
Strong words for the CoM, which, incidentally, I have been trying to contact for the last seven days, through its president Sipho Nkosi, who is also CEO of Exxaro Resources.
Yet there is hope. Nogxina believes the Codes of Good Practice can be amended, and that Shabangu, is already considering industry views on how the Codes of Good Practice could be amended.
“The minister would be prepared to give effect to reasonable amendments to the code,” he says without actually detailing his definition of “reasonable”.
More good news for industry, the Codes of Good Practice is not retrospective so mining companies that have already completed empowerment, won’t be subject to the new laws.
According to one of the Industrial Development Corporation’s (IDC’s) top bankers, Abel Malinga, the sad and protracted liquidation of Pamodzi Gold could have been avoided.
In a recent meeting, Malinga told me: “It’s a pity we were not informed earlier that the R200m in funding (from Best Rock, a fund) was not coming. We could have asked the board for the full R400m in funding that was required,” said Malinga.
In January, shareholders, including the IDC, voted in favour of a R400m recapitalisation plan of which half would be supplied in the granting of options to Best Rock. As we know, the recapitalisation never happened.
Malinga said the IDC might have been prepared to supply this funding. I’m not sure why Pamodzi Gold fiddled while the assets burned cash?
After having written about the risks now posed in the gazetted Mines Health and Safety Amendment Act, I was irked to see a press release three days later from attorney Webber Wentzel saying there had been inaccurate reporting on the issue.
It’s annoying because the press release affirms the very point I was making adding, only, that CEOs are not yet liable. I think that’s only marginally relevant to the discussion. This particular press release was money ill spent by Webber Wentzel which should consider advertising on Miningmx if it’s profile it wants.