Min­ing char­ter move hits re­sources

The Star Early Edition - - PRICES -

RE­SOURCES com­pa­nies weak­ened on Thurs­day af­ter the min­i­mum thresh­old for black own­er­ship of min­ing firms was raised to 30 per­cent, drag­ging an in­dex of the stocks to a 13-month low.

Mines Min­is­ter Mosebenzi Zwane re­leased the de­tails of the much-con­tested re­vised min­ing char­ter ear­lier on Thurs­day, rais­ing the thresh­old from 26 per­cent. It has not de­cided if com­pa­nies must keep that struc­ture per­ma­nently.

South Africa’s min­ing in­dus­try said it would chal­lenge the new char­ter in court, ar­gu­ing that it had not been con­sulted enough and it is los­ing in­vest­ment as a re­sult.

The min­ing in­dex was down 2.44 per­cent by 2.35pm, to a level last seen May 2016. It dipped fur­ther to close 3.04 per­cent lower at 20 503.55 points.

“A lot of the pres­sure we’re see­ing in the re­source stocks along­side some weak­ness in the cur­rency is com­ing on the back of this re­vised min­ing char­ter and what ef­fec­tively it’s go­ing to mean for fixed investments go­ing for­ward,” said BNP Paribas Cadiz Se­cu­ri­ties econ­o­mist, Jef­frey Schultz. Im­ple­ment­ing the char­ter would be a sig­nif­i­cant blow to an in­dus­try that was al­ready strug­gling, Schultz said. Di­ver­si­fied min­ing com­pany Sibanye Gold dropped 3.52 per­cent to R16.15, An­gloGold Ashanti de­clined 6.08 per­cent to R138.31 and An­glo Amer­i­can Plat­inum re­treated 7.18 per­cent to R281.31.

The bench­mark JSE Top40 in­dex weak­ened 1.27 per­cent at 44 512.15 points and the broader all share in­dex dropped 1.28 per­cent to end the ses­sion at 50 831.89 points.

Ris­ing in­ter­est rates in the US cou­pled with the re­lease of the min­ing char­ter saw in­vestors sell­ing the rand, which weak­ened sig­nif­i­cantly.

At 5pm on Thurs­day, the rand was bid at R12.8738 to the dol­lar, 26.75c softer than at the same time on Wed­nes­day.

The Fed­eral Re­serve raised lend­ing rates by 25 ba­sis points, weak­en­ing de­mand for emerg­ing-mar­ket cur­ren­cies that had seen large flows as a global hunt for yield per­sisted.

South African bonds were also weaker, with the yield on the bench­mark 2026 gov­ern­ment bond ris­ing.

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