Minister wants Northern Cape mine to look at other options

THE BUSINESS sustainability of state-owned diamond mine Alexkor from diamond deposits is a challenge going forward.

Updating the portfolio committee on Public Enterprises earlier this week on the six state-owned entities in her department, Public Enterprises Minister Lynne Brown said Alexkor’s business model needed to be revisited to diversify the business by venturing into other minerals options including coal and more downstream beneficiation.

Diversification

“Alexkor could possibly branch out of the sector on condition that parliament allows the change of mandate in the interest of diversification,” Brown said.

They pointed out that the deep sea mining contract with IMDSA required attention as the 85:15 diamond haul split in favour of IMDSA seemed unfair to the community and Alexkor.

“The Richtersveld CPA instability is affecting the implementation of the deed of settlement between the Government and the Richtersveld Community.”

Brown explained that Alexkor and the Richtersveld Mining Company had formed a Pooling and Sharing Joint Venture (PSJV) in 2012 as part of the implementation of the Deed of Settlement.

“Alexkor PSJV has invested over R60 million into the land mining operations which were previously abandoned. This has resulted in creation of over 150 job opportunities and indirect employment opportunities. Alexkor PSJV partnered with the local school to sponsor the salaries of teachers with emphasis on mathematics and science, and more than R934 000 has been spent on the salaries of teachers in 2016.”

Three years ago, Alexkor’s then CEO Percy Khoza announced that the state entity planned to form partnerships with emerging black coal miners to diversify its operations away from diamonds, which had been in decline for a number of years.

It was reported at the time that Alexkor had reported an operating loss of R95.8m during this period (2014-15), largely due to an impairment loss of R162m because of property it had transferred to the Richtersveld community without compensation.

Impairment

Had it not been for the impairment, it would have shown an operating profit of R66.6m.

Alexkor was established in 1992 and undertakes marine and diamond mining activities in the Ricthersveld area. In 2007 the Richtersveld community won a land claim against the stateowned entity. This led to the joint venture and a deed of settlement, whereby the company is obliged to establish a township and community business entities.