Battered in the Gamsberg

It was trebles all round when Cyril Ramaphosa opened Vedanta’s Gamsberg zinc mine in the Northern Cape in February. The president spoke of his hopes that the mining industry could be revived, and with the right regulatory environment, collaboration and investment it could become a sunrise industry. Speeches flowed from the premier of the Northern Cape, the minister of mineral resources, and Vedanta’s chair Anil Agarwal, whose words about his commitment to the SA mining industry are backed up by his 20% stake in Anglo American.

Things may have been somewhat less celebratory down at ELB, whose engineering services division has taken an absolute battering from the Gamsberg project. Delays in the final performance testing meant the company incurred additional costs in finishing the project, and delayed the final payments. Remedial work was required to bring the plant up to specifications and there has been a delay in recovering the costs. This meant that engineering services slumped to a loss of R265m in 2018 from a profit of R24m in the previous year.

The group says it is addressing the issues experienced on the Gamsberg project, and expects to get it completed and handed over as soon as possible, after which it can concentrate cash and resources on more profitable ventures. The rest of the business performed respectably given the tough economic conditions, and once Gamsberg is behind the group the challenge will be to ignore the bloodbath of the share price and get back to identifying opportunities that will allow it to rebuild.