Alexkor is yet an­other SOE ‘cir­cling the drain’, says DA

Diamond Fields Advertiser - - News - ANA COR­RE­SPON­DENT IN JO­HAN­NES­BURG

STATE-OWNED en­ter­prise (SOE) Alexkor is yet an­other ex­am­ple of a failed SOE bur­den­ing the fis­cus with de­mands for ex­pan­sion with­out any prospect of re­turn, the Demo­cratic Al­liance said yes­ter­day.

Alexkor, the di­a­mond min­ing SOE, boasted an ac­cu­mu­lated loss stand­ing at R173,6 mil­lion (2018: R13,9 mil­lion), DA spokesper­son on pub­lic en­ter­prises, Ghaleb Cachalia, said in a state­ment.

Alexkor was a joint ven­ture be­tween Alexkor and the Richtersve­ld com­mu­nity in the North­ern Cape and the facts un­der­pin­ning its losses in­cluded:

• The com­pany’s em­ployee costs of R68,6 mil­lion ex­ceeded the gross profit of R57 mil­lion de­spite hav­ing re­trenched 150 em­ploy­ees in June 2019;

• The en­vi­ron­men­tal re­ha­bil­i­ta­tion li­a­bil­ity was R203,9 mil­lion, with R168 mil­lion in the re­ha­bil­i­ta­tion trust ear­marked for that pur­pose; and

• The to­tal emol­u­ments and re­mu­ner­a­tion for ex­ec­u­tive and non-ex­ec­u­tive di­rec­tors was R9 471 330 a year.

“Alexkor cur­rently does not even have enough money to cover the re­trench­ment pack­ages of the 150 peo­ple who were let go at the di­a­mond mine,” Cachalia said.

Dur­ing the ten­ure of former pub­lic en­ter­prises min­is­ter Alec Er­win in 2006, Alexkor re­ported an op­er­at­ing loss of R38,2 mil­lion. Dur­ing the same pe­riod, it pro­duced 43 000 carats, the low­est pro­duc­tion in its (then) re­cent his­tory.

Cur­rently, de­spite carat sales hav­ing in­creased from 41 941 units to 70 061 in the year to end-march 2019, di­a­mond sales only amounted to R209,9 mil­lion. Cost of sales was R152,9 mil­lion.

“Seem­ingly, the more things change, the more they stay the same,” he said.

In­de­pen­dent au­di­tors Ngubane & Co had is­sued a dis­claimer of opin­ion and were un­able to ob­tain suf­fi­cient ap­pro­pri­ate au­dit ev­i­dence re­gard­ing Alexkor’s con­cern­ing fi­nan­cial sta­tus.

They had also noted that Alexkor sought ap­proval from Pub­lic En­ter­prises Min­is­ter Pravin Gord­han to file for business res­cue and that there were in­stances of the com­pany trad­ing reck­lessly.

“As it stands, the com­pany’s head of­fice is in

Sand­ton. Its business is in the Richtersve­ld on the West Coast. Why it re­quires an of­fice, cost­ing some R3 mil­lion a year, lo­cated 1 388 km from the mine is mind­bog­gling – it’s in­ter­nal and ex­ter­nal au­di­tors are also lo­cated in Sand­ton. And, as stated above R9,5 mil­lion goes to di­rec­tors an­nu­ally in fees and emol­u­ments.

“Un­de­terred, the com­pany is now look­ing for ‘new business ven­tures’, and will ap­proach the depart­ment of pub­lic en­ter­prises and Na­tional Trea­sury to re­clas­sify Alexkor ‘from a PFMA (Pub­lic Fi­nance Man­age­ment Act) per­spec­tive’ to per­mit bor­row­ing,” Cachalia said.


The min­is­ter of pub­lic en­ter­prises, to his credit, had placed a mora­to­rium on all ac­qui­si­tions and dis­pos­als, de­clined the re­quest for au­tho­ri­sa­tion to es­tab­lish “Alex­coal” in Mpumalanga, and placed on hold the fea­si­bil­ity study on di­a­mond ben­e­fi­ci­a­tion, he said.

“Is this part of the suite of rea­sons why he (Gord­han) is be­ing tar­geted by some in his own party? This is yet an­other ex­am­ple of a failed state-owned en­ter­prise bur­den­ing the fis­cus with de­mands for ex­pan­sion with­out any prospect of re­turn.”

The 2019 an­nual re­port was still not avail­able on the Alexkor web­site and the in­de­pen­dent au­di­tor was un­able to ob­tain suf­fi­cient ap­pro­pri­ate au­dit ev­i­dence re­gard­ing the go­ing con­cern sta­tus.

The DA de­manded full dis­clo­sure of all rel­e­vant in­for­ma­tion and a halt to this profli­gacy. If ever there was a rea­son that mines should never be na­tion­alised, Alexkor is it, Cachalia said.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.