Finweek English Edition - - Companies & markets - DAVID MCKAY

THE RE­LO­CA­TION OF BHP Bil­li­ton’s Jo­han­nes­burg-based en­ergy coal di­vi­sion to Aus­tralia – plus spec­u­la­tion that Bri­tish firm Rio Tinto is con­sid­er­ing sell­ing its 57% stake in Pal­ab­ora Cop­per – reprises the old chest­nut that the world’s largest min­ers are los­ing pa­tience with South Africa’s change­able min­ing laws.

Even stal­wart SA in­vestor An­glo Amer­i­can may soon lower its ex­po­sure to SA. That’s if it sells its 41% stake in An­gloGold Ashanti, which de­rives about half its earn­ings from this coun­try.

Leg­isla­tive changes have been widely blamed for a turn in sen­ti­ment away from SA min­ing – and there’s ev­i­dence of truth in that.

“Em­pow­er­ment is still a tricky process,” says Si­mon Toyne, an an­a­lyst at Nu­mis Se­cu­ri­ties in Lon­don. “It’s not so much as a cer­tainty – there’ll al­ways be value leak­age in an em­pow­er­ment deal.”

But there’s a dif­fer­ent view that SA is sim­ply not “ele­phant coun­try” any more to the ma­jor min­ing com­pa­nies that tra­di­tion­ally pick tier one as­sets. Says Nick Cobban, me­dia re­la­tions ad­viser to Rio Tinto: “We re­gard SA as a very im­por­tant coun­try, but our at­ti­tude to dif­fer­ent ge­ogra­phies is al­ways the same. We’re only look­ing for large projects with a long life.” Cobban de­clines to com­ment on whether Rio Tinto is step­ping back from Pal­ab­ora. An em­pow­er­ment deal is be­ing ne­go­ti­ated for the mine.

Sev­eral years ago BHP Bil­li­ton said its en­ergy coal di­vi­sion would be run from Jo­han­nes­burg. That has now been can­celled in an ef­fort to con­sol­i­date it with its met­al­lur­gi­cal coal di­vi­sion in Melbourne. Both di­vi­sions have con­sid­er­able syn­er­gies, says Bron­wyn Wilkin­son, head of com­mu­ni­ca­tions at BHP Bil­li­ton South­ern Africa.

“It’s not,” she says of spec­u­la­tion that the world’s largest min­ing firm is dis­in­vest­ing from SA. “It’s more about the lead­er­ship.”

How­ever, it’s re­sulted in the sur­prise res­ig­na­tion of Ma­homed See­dat, once con­sid­ered a bright light in BHP Bil­li­ton’s ranks. Wilkin­son wouldn’t be drawn on why See­dat re­signed but it’s thought to be a mu­tual de­ci­sion, a com­pany in­sider says.

De Beers is also sell­ing down its SA as­sets and slim­ming its head of­fice at Crown Mines.

There are only se­lect ar­eas where SA of­fers sig­nif­i­cant up­side for the heavy hit­ters: man­ganese is one, plat­inum the other.

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