Anglo sounds its concerns over Eskom, regulatory uncertainties
ANGLO American sees South Africa’s struggling state-owned power utility and regulatory uncertainty posing major risks to its operations in the country, where it’s planning to boost spending to expand output for platinum, manganese and iron ore.
The challenges posed by Eskom Holdings have emerged as the key issues the company is constantly having to deal with, Anglo chief executive Mark Cutifani told delegates at an investment conference in Joburg.
Eskom, which produces about 95 percent of South Africa’s power, has been forced to implement rolling blackouts that caused economic output to contract the most in a decade in the first quarter.
“There is absolutely no doubt it plays an important part in the decisions we make,” Cutifani said.
“It probably represents our single most-important risk we deal with. This year, after a difficult start, we have been able to work with authorities and work around load shedding,” he added, using the local term for power cuts.
The government also needed to improve the regulatory environment to get investors back into the mining sector and end uncertainty that has weighed against plans to build new mines in the country, he said.
“We still have a lot more to do,” Cutifani said.
“I can’t say the regulatory environment is where we want it to be,” he added.
South Africa is the world’s largest supplier of platinum-group metals and Anglo American Platinum is exploring ways to boost output at its key Mogalakwena mine as prices for platinum metals rally.
Kumba Iron Ore, another Anglo unit, is also weighing options to extend the life of its giant Sishen ironore mine by another 20 years from the current life of 13.
Anglo, founded in Joburg more than a century ago, is also spending $2 billion (R29.6bn) to build an underground operation at its Venetia diamond mine in Limpopo.
The plans come as President Cyril Ramaphosa, a former mining union leader and one-time platinum company investor, battles to attract investors in the sector and the country, amid continuing sluggish economic growth and a burgeoning debt. I Bloomberg