‘Forget 26% — we need practical involvement’
THE depreciation of the rand by nearly 40% over the past two years appears to have helped lift the fog that has shrouded the future of South Africa’s mining industry for close to a decade, but questions about the transformation of the industry have raised red flags.
That the “fight is about shares, not about the meaningful participation of South Africans in the [mining] economy” is an argument that Ayanda Bam, the executive chairman of Kuyasa Mining, has heard many times.
The industry advocates a “once empowered, always empowered” approach, while the government — through the Department of Mineral Resources — wants mining companies to maintain a minimum 26% black shareholding.
Bam and his business partner, Thabo Sibeko, have been running Kuyasa Mining for two decades. They operate two coal mines and are working on a coal-fired power plant project.
Bam, who has supplied Eskom with coal since 1997 — starting with about 40 000 tons a month to now supplying the national grid with 140 000 to 160 000 tons of coal a month — said it was regrettable that the industry was still debating the question of transformation.
“I don’t understand why we are still talking about it. We’ve had this discussion. Somebody won and somebody lost, that is why it’s back on the table. This is what’s unfortunate about an agreement,” he said.
The department closed submissions on the Mining Charter on Tuesday, but said it may extend the deadline.
Over the past 12 years the industry has operated under a charter that, despite amendments, has not prevented empowerment partners from buying shares and then cashing them in when the share price rises.
Said Bam: “By their very nature, shares are things you trade on the stock exchange to make money.”
But black investors and other stakeholders who wanted to participate in the sector needed to be honest about whether they wanted the rewards of the cash or to be part of the industry, Bam said.
“For me, I don’t care about 26% — I don’t know how we even arrived at that number and I don’t know what it means. But what I know is that we need more black people practically involved in the mining industry.”
Black Lite Consulting MD Ajay Lalu said the argument about shares lay at the heart of the problem. He said the industry’s “once empowered, always empowered” argument was based on an approach that perceived transformation as an event, not a continuous process.
“Where the government is coming from . . . is that the mineral wealth of this country belongs to everyone who lives in it and while you mine, you have to make sure that you have 26% of those assets in black hands. This will ensure that there is continuous transformation,” he said.
This was not the best strategy, Lalu said, which is why the charter has a balance POWER PROJECT: Ayanda Bam, executive chairman of Kuyasa Mining, says he is not interested in bidding for Anglo’s Eskom-related coal assets scorecard to evaluate factors such as community development, beneficiation, employment equity, women in mining and procurement.
While the industry debates how far it has come in terms of transformation in the past 20 years, divestment by Anglo American and BHP Billiton has offered black miners with operational assets a window of opportunity for more substantive transformation.
But Bam said he was not interested in bidding for Anglo’s Eskom-related coal assets, as the mining house shifts its focus to copper, platinum and diamonds.
“Our experience is that when the ‘majors’ put up these operating assets for sale, they draw a huge interest and we usually lose in favour of — I suppose — better-qualified bidders.”
To reduce a debt of $10-billion (about R155-billion) caused by expensive misadventures in Latin America, in particular its Minas-Rio project in Brazil, Anglo has decided to reduce the size of its global portfolio.
In South Africa, the biggest beneficiary of the sell-off has been Sibanye Gold, which, under the leadership of Neal Froneman, has bought some of Anglo’s more labour-intensive platinum assets.
Instead of bidding for Anglo’s assets, Bam said, Kuyasa was focused on bringing its power plant project to fruition.
Kuyasa is anticipating that it will receive the go-ahead for construction of the plant to begin at the end of next year. The project has been in the pipeline for 13 years.
By their very nature, shares are things you trade on the stock exchange in order to make money