JOHANNEBURG (miningweekly.com) – The super tax proposed in the...

JOHANNEBURG (miningweekly.com) – The super tax proposed in the African National Congress’s (ANC’s) recent nationalisation-rejectxing study is not good for mining, African Rainbow Minerals (ARM) executive chairperson Patrice Motsepe said on Monday.

“You have to have a globally competitive mining dispensation,” Motsepe said at question time after ARM reported a 24% earnings increase to R1.94-billion in the six months to December 31.

Cash generated from operations increased by 25% to R2.56-billion, compared with R2.05-billion for the same period in 2011.

He said that the benefits to both the government and the mining companies had to be mutually beneficial.

An excessive mining tax dispensation would have a hugely negative impact and he would find it difficult to justify it to his South African and global shareholders.

That was why his engagement with the South Africa government was not always friendly.

What he said to the government behind closed doors was thus on occasion far more aggressive than what he said in public.

The best partner for a government wanting to create jobs, hope for all people and a stable democracy was the private sector.

He was excited about the current commitment of the South African government and the discussions within the ANC.

Responding to questions on the Zimbabwe government’s demand that the controlling shareholding of foreign-held platinum mines be transferred to local owners, he said that the government of Zimbabwe had to be encouraged to work together with the private sector to create an environment that was globally competitive.

At the heart of friendship was being honest and forthright with Zimbabwe on the challenges, which had already resulted in millions of Zimbabweans leaving to settle in South Africa.

He wanted to encourage the Zimbabwean government to do the right thing and to create jobs in Zimbabwe.

Like South Africa, Zimbabwe needed to realise that it was the private sector and not governments that made job-creating investments.

Governments should ensure that the private sector had both certainty and confidence, which would enable governments to benefit from taxes and the private sector also make money for their shareholders, without which it did not make sense for them to be in a country.

He was confident that both Zimbabwe and South Africa would eventually do the right thing after trying everything else.

“We can’t give up on Zimbabwe. We’ve got to keep urging Zimbabweans to move in the right direction,” he added.

South Africa and Africa had to be extremely competitive destinations for global investment.

It was also wrong, however, to have too negative a perception of Africa, despite the facts most of the time fully justifying such perceptions.

On Section 54 safety stoppages that have lost South Africa large volumes of mining output, Motsepe said that stopping mines unnecessarily created “excessively dangerous” environments when those mines had to be restarted.

He urged that Section 54 notices be restricted to material safety deviations alone.

Because of the negative impact that safety stoppages, strikes and Zimbabwean indigenisation are having on the Southern African platinum industry, there was also a positive opportunity for investors in platinum mines.

“I can tell you that the best time to go into platinum is now,” Motsepe added.

It is understood that ARM is talking to its platinum partners about a possible consolidation of the eastern limb of the Bushveld Complex in particular.

At a time of Anglo American Platinum's anouncement of a review of its assets and the problems being experienced by Implats, ARM is allocating financial resources for platinum opportunities in both South Africa and Zimbabwe.

Some of the biggest mining companies in the world were looking at opportunities in platinum, despite the fact that many of the current impacts on the platinum-mining industry were unacceptable.

He said ARM and its partners expected to invest R50-billion in the next ten years.

The business of South Africa’s biggest platinum company, Anglo American Platinum, is under review in response to London analysts who have been baying for its blood, which would result in job losses, and South Africa’s second biggest platinum miner, Implats, is suffering the aftermath of a six-week illegal strike that has resulted in the loss of three lives, more than 2 000 jobs and well over R2-billion.

The Zimbabwe issue is now looming to hurt platinum still further, with Implats in urgent discussions to save its Zimplats investment and the indigenisation implementation plan for its half-owned Mimosa being thrown out, along with that of Aquarius Platinum.

Diversified ARM is itself still sitting pretty with net cash – excluding partner loans – of R1.66-billion and growth projects including Assore’s Khumani iron-ore expansion project from 10-million tons a year to 16-million tons a year, which is currently ramping up production well ahead of schedule.

The Nkomati Nickel large-scale expansion project with Norilsk is ramping up; Xstrata Coal’s Goedgevonden coal mine reached design capacity and Vale’s Konkola North copper project in Zambia continues to advance on schedule and within budget. Commissioning of the concentrator plant is expected in December.

ARM is also happy with the South African government’s commitment to invest substantially in rail, ports and electricity.

Iron-ore sales increased from four-million tons to 6.8-million tons; nickel sales increased 21% from 4 300 t to 5 200 t and manganese alloy sales 20% from 87 000 t to 104 000 t.

The initial drilling results across 10 612 m for the second phase of the Konkola North copper project are reportedly encouraging, with total production expected to increased to 100 000 t/y of copper.

ARM’s partners are working on expanding their iron-ore operations and increasing manganese ore production and expanding the Modikwa and Two Rivers platinum mines.

The target is to have all operations, with the exception of Nkomati Nickel, positioned below the 50th percentile of each commodity’s respective global cost curve by the end of 2012, with Nkomati expected to reach this target in 2014.

Assmang has converted one furnace at the Machadodorp works from ferrochrome to ferromanganese and a further two furnaces will be converted by the end of the 2012.

Edited by: Creamer Media Reporter