|Implats gets the boot|
|Sunday, 19 February 2012 00:00|
Government has ordered Impala Platinum (Implats) to cede its shareholding in Mimosa Mining Company so as to loosen its grip on the platinum sector and allow a window for the participation of locals, The Sunday Mail Business can reveal.
Mimosa is jointly owned by South Africa's Impala Platinum, which is the majority shareholder in leading platinum producer Zimplats, and Johannesburg Stock Exchange-listed Aquarius Platinum Limited.
It is envisaged that it will be ideal for Aquarius to shore up its stake to 49 percent, with the remainder going to local investors.
Minister of Youth Development, Indigenisation and Empowerment Saviour Kasukuwere told this paper on the sidelines of the Zvishavane Community Share Trust launch last week that they have since notified Implats of the directive.
"Implats cannot be allowed to maintain a 24,5 percent portfolio investment in Mimosa while they have their hands full with the massive capital expenditure that will be required at Zimplats.
"They cannot have their cake and eat it too. They have to make space for Aquarius, as Mimosa is a very significant investment for Aquarius but is a drop in the ocean for Implats.
"Having two minority shareholders splitting the non-indigenous 49 percent, with each holding 24,5 percent, will be very damaging for Mimosa, as the investment will become a portfolio investment for both Aquarius and Implats, and the company will be left without a shareholder of reference for funding and technical support; neither of them will be sufficiently incentivised to support any meaningful capital expenditure, and the company will not be able to embark on the next expansion phase to double production," explained Minister Kasukuwere.
This development comes in the wake of reports that the two shareholders are proposing to cede a cumulative 28 percent, arguing that the remaining percentage must be credits for the community projects that they have done.
Minister Kasukuwere noted that after ceding 51 percent, Mimosa will still need to raise at least $300 million for the next phase of expansion, which is designed to double production.
A feasibility study has already been commissioned by Mimosa for this next phase.
"Using a notional vendor financing structure to implement the indigenisation, with the support of a strong minority shareholder holding 49 percent, the company will be positioned to raise the required funding from some financial institutions, who have been sounded out.
"The financial institutions would only be interested in funding expansion capital, but they will not fund a buy-out of the existing shareholders. The funding would need to be injected into the operating entity as a loan, based on the feasibility study and the mining expansion plan," added the minister.
Mimosa's managing director, Mr Winston Chitando, who is also Chamber of Mines president, said the company was pressing ahead with its expansion programmes despite the changes in shareholding that the regulations are demanding.
He said they have already done a feasibility study for further expansion.
"We are planning phase six mine expansion and we have undertaken a feasibility study.
"The expansion would bolster revenue generation, profitability, operational costs and annual platinum output, which currently stands at 195 000 ounces per annum," added Mr Chitando.
On the corporate responsibility side, Mimosa Mine has changed the face of Zvishavane.
The company has commissioned 11 boreholes in Zvishavane, a state-of-the-art mortuary at the district hospital and six classrooms and toilets at Dadaya Primary School, and a primary school.
Mimosa has also built houses for almost all of its more than 2 000 employees under the housing development and home ownership scheme for general workers, supervisors and managers.
Meanwhile, the Chamber of Mines said it will soon engage the Government to deliberate on the newly gazetted mining fees as they are unsustainable.
Government recently increased the fees by between 500 percent and 5 000 percent.
Mr Chitando told The Sunday Mail Business that the body had conducted a comprehensive study that has shown that the new fees are exorbitant compared to other countries in the region.
"We have done a comprehensive study covering countries such as South Africa, Australia, India and Democratic Republic of Congo (DRC).
"The study has shown that our fees are way too high and we will soon engage the Government to deliberate on this issue," said Mr Chitando.
He also added that there was a need to improve the macro-operating environment for mining firms in the country.
Government, however, maintains the increments are meant to curb speculative activity within the mining sector.
It argues that reviewing the fees upwards was intended to raise funding to support small-scale miners through programmes such as the Mining Industry Loan Fund.
According to Statutory Instrument 11 of 2012, published on January 27 2012, registration of diamond claims has increased from $1 million to $5 million with a new ground rental fee of $3 000 per hectare per year.
Application fee for prospective coal investors has been increased from $5 000 to $100 000 while the registration or renewal fees is set at $500 000.
In addition, there is now a new ground rental fee of $100 per hectare.
Application fees for platinum claims for both ordinary and special prospectors is now pegged at $500 000, up from $200.
However, registration fees for the metal have spiked from $500 to $2,5 million. A licence to deal in precious stones (cutting and polishing) and a gold-buying licence now attracts $100 000 and $5 000, up from $20 000 and $2 500 in that order.
Gold jewellery permit now attracts a $2 000 fee from $1 000, while a custom milling licence has been adjusted from $2 000 to $8 000.
The mining sector is one of the country's key economic enablers expected to contribute significantly to the gross domestic product (GDP).