Missed opportunity for black ownership

THE big deal we have been waiting for finally happened this past week. Anglo American made the call on its unwanted platinum mines in the Rustenburg area, choosing to sell them to the “Mr Fixit” of South Africa’s very broken mining community, Neal Froneman.

It was a better bet than listing the assets, given the state of global stock markets and their very deep dislike of anything mining at the moment.

There’s no better lesson than the performance of BHP Billiton’s offshoot, South32, since its unbundling and May listing.

Its share price has plunged more than 19% in that time, valuing it around R87-billion.

The executives at Billiton’s Melbourne headquarters must be kicking themselves now for not having accepted an offer last year from Mick Davis, former head of Xstrata, that was rumoured to be in the region of $10-billion (R138-billion). Word has it that he’ll return with another.

So congratulations to Froneman, but I must admit to being rather disappointed that the assets did not go to a black-led consortium.

I expected something more from Anglo, a company whose almost 100-year history is inextricably woven into South Africa’s. Transformation should be a central consideration in a decision of such magnitude.

Sibanye has promised an empowerment deal with employees, Royal Bafokeng Holdings, the Bakgatla-baKgafela traditional community and others, selling them a 26% stake.

This meets the minimum requirements; one can’t castigate it for following the guidelines set.

But as we’ve come to understand over the past decade of this journey in transforming the economy, such deals very rarely play out the way we hope they will — in the form of black ownership going beyond just paper to the actual day-to-day running of assets.

There were other bidders for the Anglo assets, among them a black consortium of mining engineers and entrepreneurs from the mining region that was overlooked.

But maybe funding constraints counted against them, or perhaps there were question marks over their level of management experience.

On both these counts, it’s hard to discount the hardened experience of Sibanye’s Froneman, with his many years in mining, or the company’s balance sheet.

Black investors would not have found many domestic lenders or even global banks eager to fund the purchase of a mining asset in South Africa, or anywhere else in the world, at the moment.

The terms offered by alternative, and I guess more “friendly”, funders such as the Public Investment Corporation or the Industrial Development Corporation are not really as friendly as one might think.

I expected more from Anglo, whose history is woven into South Africa’s

This is true even for businessmen well connected within the ruling party; the simple reason being that as lender of last resort for some of these deals, their terms leave very little room to manoeuvre for any start-up in the commodity space.

In many cases, the PIC or IDC set tougher loan terms than an entity such as Investec.

So maybe my hopes for the creation of a black-owned and -managed platinum miner were a very long shot.

While platinum and other commodities markets are in bear-market territory now, one has to understand that these are just cycles.

They will turn, and it would be transformational to have a black miner there for that ride.

Instead, black investors will more than likely pile in again when the cycle is near its peak.

A vicious cycle.