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Eased exchange control opens way for mining investment

Webber Wentzel partner Manus Booysen tells Mining Weekly Online’s Martin Creamer that the easing of South Africa’s exchange control has opened the way for both local and foreign companies to make far greater use of the Johannesburg Stock Exchange (JSE) to raise capital for both local and international mining investments. Video Editing: Shane Williams.

26th February 2014

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – The easing of South Africa’s exchange control has opened the way for both local and foreign companies to make greater use of the Johannesburg Stock Exchange (JSE) to raise capital for both local and international mining investments.

Webber Wentzel partner Manus Booysen tells Mining Weekly Online in the attached video that the way is now open for the JSE to become a more significant source of mining capital than it has been in the past, when foreign exchange restrictions blocked its path.

Compared with the Toronto, London and Australian stock exchanges, the JSE has traditionally played an insignificant role as a provider of mining capital.

Now that is all poised to change, says Booysen, mainly because of exchange control easing opening up new horizons.

Booysen says in the video Mining Weekly Online is now flighting, that the way is open for South African listed entities to make use of a South African Treasury company that facilitates investment of up to R750-million in international projects.

Another relaxation has been the removal of exchange-control restrictions on foreign-listed entities that inwardly list, as was seen last year with the inward listing of the London- and Hong Kong-listed mining and trading major GlencoreXstrata, headed by South African-born Ivan Glasenberg.

Booysen says that these relaxations will allow mining companies to make far greater use of the JSE in the future.

Mining Weekly Online has reported that South Africa has an opportunity to become a centre of mining finance for Africa as the continent becomes the world’s next major producer of metals and minerals for an urbanising world.

In his address to the Wits Business School in 2010, the then Xstrata CEO Mick Davis, now head of the private equity mining company X2, expressed the view that it was just a matter of time before Africa’s prodigious mineral riches would need developing to satisfy world demand.

Investec Asset Management strategist Michael Power later added that the commodities supercycle — which ran from 2000 to 2008 — was merely resting between courses, and described the past couple of years as an abrasive palate-cleanser ahead of the eventual main course.

While China added the equivalent of an Australia to its economy in 2013, it could, Power said, be adding a Germany a year in the years ahead.

Davis, whose X2 has since raised R1-billion for investment in mining, spoke of the global economic meltdown having failed to melt demand for resources and called for the removal of barriers preventing the full indexation of foreign inward listings on the JSE – a call which has now been heeded.

National Treasury deputy director-general for tax and financial sector policy Ismail Momoniat told Mining Weekly Online at the time that the National Treasury was in the process of modernising exchange control and that the rationale for the exchange control still in place was under review.

Even then, applications from other foreign-domiciled companies for domestic classification were being granted on a case-by-case basis.

Finance Minister Pravin Gordhan has regularly expressed the keenness of the South African government to promote inward investment, particularly by companies already growing off a South African operational base.

Edited by Creamer Media Reporter

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