Same laws, only dif­fer­ent

Gov­ern­ment’s DME pre­pared to think on its feet

Finweek English Edition - - Companies & markets - DAVID MCKAY

GOV­ERN­MENT WILL SHORTLY dis­close em­pow­er­ment cred­its min­ing firms can earn if they ben­e­fi­ci­ate met­als. Ac­cord­ing to Sandile Nogx­ina, di­rec­tor-gen­eral at the min­er­als and en­ergy de­part­ment, the pro­pos­als are com­plete for SA’s gold and plat­inum sec­tors. Work on other com­modi­ties con­tin­ues apace.

In essence, min­ing firms that en­cour­age, say, jew­ellery fab­ri­ca­tion may not have to meet the 26% eq­uity sales as en­shrined in the min­ing char­ter. “Min­ing firms claim Gov­ern­ment is try­ing to make them jew­ellers,” says Nogx­ina. “But that’s not the case. We just need to show you helped en­cour­age the growth of the down­stream mar­ket.”

The pro­pos­als, that will act as mod­i­fi­ca­tions to the Di­a­mond Act and the Pre­cious Met­als Act, will spec­ify how en­cour­ag­ing lo­cal con­sump­tion of raw met­als will con­vert into em­pow­er­ment points. The only draw­back is that dif­fer­ent ra­tios will be ap­plied to each com­mod­ity, which raises the prospect of an­other bun-fight be­tween min­ing sec­tors. The pres­sure to change laws is partly com­ing from the min­ing in­dus­try it­self.

The Cham­ber of Mines of SA last year said be­tween R5bn and R10bn in fixed in­vest­ment had been de­ferred ow­ing to un­cer­tainty about the laws. Much of this is for­eign in­vest­ment, and while for­eign min­ing firms have hardly fled SA’s shores, Gov­ern­ment is anx­ious to have items such as ex­plo­ration ex­pen­di­tures im­prove on a scale seen in other com­mod­ity-rich coun­tries.

It’s no co­in­ci­dence, there­fore, that the Gov­ern­ment-owned In­dus­trial De­vel­op­ment Cor­po­ra­tion (IDC) has pumped R60m into a lit­tle-known com­pany, Kala­gadi Man­ganese.

The ul­ti­mate aim is for Kala­gadi Man­ganese to build a man­ganese mine and a R1,2bn smelter at Coega pro­duc­ing 350 000t/year of fer­ro­man­ganese, a metal used in the pro­duc­tion of steel and there­fore of cap­i­tal im­por­tance to China.

The to­tal cap­i­tal cost of the mine and smelter is R3bn and is an ex­am­ple of ben­e­fi­ci­a­tion- in- mo­tion. Rel­a­tively cheap dirt mined in the North­ern Cape, as Min­tek’s pres­i­dent Paul Jor­daan would have it, be­comes more valu­able metal in the East­ern Cape.

Kala­gadi Man­ganese is a per­fect demon­stra­tion of Gov­ern­ment’s in­ten­tions. It’s an­other shot in the arm for Coega; and Kala­gadi Man­ganese has a women’s group­ing – Kala­hari Re­sources – as its ma­jor share­hold­ing. Not even widely felt fears of rail­way bot­tle­necks are in­ter­fer­ing with a project that squarely meets po­lit­i­cal ex­pe­di­ence.

Said Ufik­ile Khu­malo, vice-pres­i­dent of the IDC’s in­dus­trial and util­i­ties di­vi­sion: “The project fits per­fectly within the IDC’s man­date.” About 600 jobs will be cre­ated at the mine; a fur­ther 400 will be em­ployed at Coega.

Kala­gadi Man­ganese fits the IDC’s man­date. Ufik­ile Khu­malo

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