JOHANNESBURG – The spate of mining companies spinning off their South African assets is an “issue that must be dealt with”, Mineral Resources minister Ngoako Ramatlhodi said on Wednesday, adding that he was formulating a response to similar proposals in the future.
Speaking at the second Jo’burg Indaba on mining on Wednesday, Ramatlhodi said returning to Parliament a bill amending the Mineral and Petroleum Resources Development Act would make better sense than running the risk of a time-consuming and damaging battle in the courts if it was signed into law.
The bill is awaiting President Jacob Zuma’s signature and there is debate among his and Ramatlhodi’s advisers over whether it is constitutionally sound.
Ramatlhodi, who took over the ministry in May, has raised concern about potential legal challenges to the bill, which he says was rushed and problematic. He conceded there was uncertainty over the country’s mining laws and that there appeared to be disinvestment from SA.
BHP Billiton and Gold Fields have both ring-fenced their South African assets and put them into separate companies while retaining their international exposure.
AngloGold Ashanti tried something similar but its shareholders rejected the plan because it entailed a $2,1bn rights issue.
Ramatlhodi told Business Day: “I’ve asked someone . . . to develop a comprehensive response to what I perceive to be a withdrawal of certain companies from SA.
“I don’t want to bury my head in the sand and pretend this thing is not happening.
“We must be clear: There is an issue to be dealt with.
“I’ve also asked the question, is this necessarily a bad thing? Could this be an opportunity for South Africans to own these mines?”
While the motivation for companies making such decisions may be broader than factors falling within his department’s competencies, Ramatlhodi felt that as minister and a member of the African National Congress he could make a difference.
“From an ANC perspective, we are looking at the issues that need to be addressed that are contributing to the erosion of confidence in SA,” he said.
Mining companies should take him into their confidence when planning large restructuring exercises or sizeable deals rather than consulting him once the processes were finalised, he said.
“It’s important that we work as a team because I look at a much broader picture because of my ministerial mandate, and I could bring insights into political innuendos companies may not fully appreciate . . . This way we could have a good conversation and I understand the basis of them doing certain things,” he said.
Asked during the conference about the target of 26% black ownership of mining companies by the end of this year, and whether that level would be changed, Ramatlhodi gave a vague answer.
“We’ve put in the colour and the number as an initial opening point,” he said.
Anglo American chief executive officer Mark Cutifani said any increase in the equity target would be very poorly regarded by the market.
“The uncertainty is what isn’t said about may occur about ownership targets in the future. Anything above and beyond where we are today is considered by international markets as creeping expropriation,” he said.
SA is ranked outside the top 50 mining jurisdictions despite its enormous mineral endowment.
“Something is wrong,” Cutifani said, stressing that regulatory certainty was essential to compete with other jurisdictions.
The government had to shelve its plans to set below-market prices for designated minerals to foster economic development, Cutifani said, as this was a “frightening” concept in a free market.
He also urged the government to put infrastructure development ahead of beneficiation in its priorities to grow the country’s wealth and job creation.