Every Friday morning, SAfm’s AMLive’s radio anchor Sakina Kamwendo speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Kamwendo: Manganese mining company Ntsimbintle, headed by struggle veteran Saki Macozoma, is having huge success in the Northern Cape.
Creamer: There is a lot about the big ‘T-word’, transformation, but if you start digging around you will find that there is a lot of transformation going down. If you go into the Kalahari sands, there you see Ntsimbintle. This is not a passenger in the development of this manganese, but it is the controlling shareholder, 50.1%. That was done by Saki Macozoma, who came in there in 2003 and has been very patient.
Now, we see the dividend flow coming through, R1-billion dividends and you see a great celebration by the community because they cut into this R300-million going into the community. Already over R40-million going in there for mainly youth development and even a radio station and a lot of other things happening. You can see how the people are benefiting from this mining.
Now, the initial investment there was all foreign, R1.7-billion in equity capital, but the shareholding is now grassroots as well. This Ntsimbintle, led by Saki Macozoma, has 19 groupings. You can see the one grouping benefiting incredibly, because it has got 14.4% and a lot of development there. Just look at these activities by Saki Mazozoma. He is a struggle veteran, he was jailed on Robben Island till 1982.
We know we are in youth month and he was a youth then. He was the SA student movement organiser and put in jail. When they let him out, he became a soils analyst with the company, Blasting & Excavation. You have got this student activist and you hear blasting and excavation and, of course, the police immediately ran in.
They didn’t want him around explosives. He then had to take another job with the SA Council of Churches and we know how he has come through in to the top corporates and even led Transnet. We can see now at his age, 60, he has done a fantastic job of turning that fantastic asset in the Kalahari to account. Many people come to South Africa and they are very envious about this fantastic manganese orebody that we have got there.
It is thick, shallow, homogenous and continuous. It goes up to 49% manganese. If you go to China, for instance, some of their manganese is below 20%, so it is a totally different story. Here we can see how individual leaders can get things done for the community. But, we need that government backing to get an investment like R1.7-billion, all foreign, coming through with Pallinghurst that is listed on the Johannesburg Stock Exchange and their Jupiter, which is the junior shareholder there at 49.9%. But, unless you get a government that creates that environment, that initial R1.7-billion is not going to come in.
The grassroots community is not going to get this R300-million come through. You can see how patient they have been, 14-years waiting for this. I was at the sod-turning there in 2003 and people have had to wait, because there have been ups and downs with the manganese price. All of a sudden we had a nice burst with the manganese price. Oout comes this lovely dividend. Going to be another R500-million and the community there benefit strongly.
Kamwendo: The 100%-black-owned Modi Mining has won a R158-million contract from Australian mining company South32.
Creamer: Again, I see the ‘t-word’, transformation. You are not looking at 26% here, this is 100% black-owned. This is Modi Mining, led by blacks, owned by blacks, and winning R158-million contract from the Australian mining company South32, which does quite a lot of mining, they do coal mining, but also do manganese mining.
They produce aluminium, but in this case, it is coal at Wolvekrans. Here you have got a situation where a company has got a three-year outlook now to do a lot of sub processing work at this coal mine involving the stripping of the overburden and soil processing. It is not going to go partly this way and that way, it is going to go 100% into black hands. But can these companies like South32 continue being enthusiastic about South Africa against the background of some of our legislation that is coming through now on the 1% over the top.
I mean, how do you deal with a 1% over the top. So in other words your revenue, the government now wants to take and it is gazetted. They are fighting it in court, but it is gazetted that they take 1% over the top. If you do the calculations, it would mean that they would take R6-billion off the top and we don’t even know where it is going in the Department of Mineral Resources (DMR). That R6-billion is equivalent of what has been paid out in dividends. So those little guys sitting there that have invested, have provident funds.
People at the SABC putting money into provident funds that is going into investment in mining, they are going to get zero. They take 1% off the top, they think it is a small percentage, but it is huge. I don’t think the DMR actually understands this industry at all and they are going to destroy it.
Things like we read about now R158-million contracts from Australian mining companies won’t happen, because you can already see they are talking about the cost of doing business here is huge. Then the horrible constraints from the regulatory environment are putting investors off.
Kamwendo: Yet another black-controlled mining junior – the Johannesburg Stock Exchange-listed Wescoal – is set soar as it trebles production.
Creamer: You see here and this is an even harder act, because Wescoal is on the JSE and was just a normal investment by ordinary shareholders, a lot of them as I say are provident funds.
Those have no colour, you can’t talk about the colour of a provident and pension fund. Wescoal now, because of the demands of Eskom, Eskom says you have got to be 50.1% they have had to become black-controlled at 59%. In the meantime, because they wanted to grow at the same time, they used that money that came in from the black-economic empowerment to actually buy another asset, Keaton, which has meant that they are heading for a trebling of production.
They are at 3-million tons now, going to 9-million tons. But, of course, they have got to watch out, because every time they do an acquisition like that, they stand to dilute their shareholders, even if those shareholders are black they are not going to be happy about being diluted. I think the government needs to watch out and Eskom as well as to the impact it has on the small man, that provident and pension fund owner. Is that person going to suffer because of all their antics at the top?
Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.