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SOUTH Africa’s new carbon tax could cost the company between R200m and R300m in the next three years, said Reuters citing the comments of Chris Griffith, CEO of Anglo American Platinum (Amplats).

The proposed carbon tax, which is to come into effect in June, has been roundly criticised by the country’s Minerals Council which said that on a net basis some 6,836 jobs could lost as a result of the tax.

Griffith said that marginal mines would be further pressured by the proposed tax and that the government ought to focus on enabling mining companies to invest in renewable energy sources as a means of lowering the country’s carbon footprint rather than installing what was “just another tax?”.

“Carbon taxes are part of toolbox in dealing with climate change so we accept it,” said Roger Baxter, CEO of the council.

“But it needs to be part of a toolbox that works. South Africa shouldn’t be thinking about this yet. Yes, it should be getting its policies in line, but there needs to be breathing room. We just seem to be jumping into something that will detract from industry competitiveness,” he added.

The post Amplats estimates R200m to R300m hit over three years owing to carbon tax appeared first on Miningmx.

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SOUTH African mines minister, Gwede Mantashe, lauded a decision by Anglo-Australian group, Rio Tinto, to expand Richards Bay Minerals (RBM) saying the investment confirmed work his government had been doing to improve the country’s business reputation.

The group announced earlier this week that it would invest $463m, about R6.5bn, in the Zulti South project which would sustain RBM’s current capacity and extend its life of mine by more than three decades.

“The investment is an affirmation of South Africa’s attractiveness as an investment destination,” said Mantashe in a statement. “It confirms South Africa’s stable and predictable policy and regulatory environment,” he added.

Rio Tinto’s investment decision follows – among others – the recent $400m investment by Vedanta in Gamsberg in the Northern Cape.

According to Rio Tinto CEO Jean-Sébastien Jacques, Zulti South is one of the best undeveloped mineral sand deposits in the industry, and will extend RBM’s position as a world-class, first-quartile asset.

“The long-term fundamentals of the market remain strong, and production from Zulti South will commence in time to fill a widening supply gap, ensuring RBM’s position as a leader in the sector, and delivering strong returns to our shareholders,” Jacques said.

The post Mantashe lauds Rio Tinto’s R6.5bn investment in Richards Bay Minerals appeared first on Miningmx.

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SHARES in Sibanye-Stillwater were under pressure today following a company announcement it had raised R1.7bn by means of a share placement – cash it would use to pay down debt amid a strike at its South African gold mines.

The stock closed just over 17% weaker on the Johannesburg Stock Exchange. On a year-to-date basis, shares in the company are 40% higher owing to improved prices for palladium and rhodium and a deterioration in the value of the rand to the dollar, although the rand has regained ground in the past month.

The company sold new 108.9 million shares, equal to just under 5% of its issued shares, for R15.50/share, raising gross proceeds of R1.7bn. The issue price was at a 2% discount to the volume weighted average share price on April 9.

On April 8, announcing it was to begin the book-build process, Sibanye-Stillwater said its gold mining operations had been heavily affected by a strike involving members of the Association of Mineworkers & Construction Union (AMCU). It said it would use the cash to cut debt especially as wage negotiations in the platinum sector fall due in May or June.

“It is pleasing to note the significant oversubscription of the transaction which is testament to the strong market support for our company,” said Neal Froneman, CEO of Sibanye-Stillwater in a statement following announcement of the successful book-build. He added the firm was confident about its plans to deleverage the balance sheet.

Analysts were largely sanguine on the book-build as well. “The equity raise, in our view, was unexpected,” said analysts for Goldman Sachs in a note. “However, it does help the company de-lever and positions it well in case the PGM [platinum group metal] wage negotiations result in a strike like [that] at the gold operations,” the bank added.

Adrian Hammond, an analyst for Standard Bank Group Securities, said the decision to raise cash was prudent given the gold strike was taking longer than expected to resolve. He also referred to other headwinds identified by Sibanye-Stillwater in a first quarter update, also issued on April 8, including the delay in refined metals to Anglo American Platinum following the adoption of a roll refining agreement in terms of Sibanye-Stillwater’s takeover of the Rustenburg Mines.

“We do not view this decision as negative for fundamentals, but rather as maintaining a hard line with AMCU and as a precautionary measure,” he said.

Nonetheless, investors fled the share whilst in comparison, other gold shares fluttered down gently on the day (AngloGold Ashanti -2% weaker). Hammond said the impact of the AMCU strike on the gold mines should not be estimated given the high fixed cost nature of the gold mines. He described Sibanye-Stillwater’s current financial year as a “non-event” and estimated the gold business would have a R1.5bn negative contribution to EBITDA.

Hammond also said Sibanye-Stillwater was being overly cautious regarding the prospect of a prolonged wage related strike in the platinum mines given possible gold sector exhaustion following AMCU’s four-month strike. But Joseph Mathunjwa, president of AMCU, was a presence on the headlines and airwaves in Johannesburg yesterday.

This followed comments he made at a PGM investment conference in which he declared AMCU would never bow to Sibanye-Stillwater and controversially compared Froneman to the white imperialism of rand lord Cecil John Rhodes.

“Neal Froneman and his Mafia are the last battalion of exploiters. If you look where they are coming from it’s Cecil John Rhodes and Charles Rudd from Gold Fields.”

(Rudd famously negotiated the Rudd Concession on mineral exploration from Matabele chief Lobengula in 1888 which Rhodes subsequently used to justify an invasion of the country which was subsequently named after him as Rhodesia but became  Zimbabwe  in 1980.)

Mathunjwa continued: “When they unbundled at Gold Fields, Froneman came up with Sibanye. He never left the learnings of Cecil Rhodes. He was groomed and brought up under those circumstances.”

The post AMCU’s Mathunjwa a pall over Sibanye-Stillwater despite “prudent” R1.7bn share deal appeared first on Miningmx.

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THE Zimbabwe government is carrying out a major overhaul of the country’s mining legislation and regulations, but the southern African country’s miners are waiting for words to be turned into actions.

That became apparent at the Harare Indaba – Investing in resources and mining in Zimbabwe –  held today in Johannesburg where Polite Kambamura – deputy minister for Mines and Mining Development in Zimbabwe – outlined hugely ambitious targets for the country’s mining sector.

In reply, Batirai Manhando, president of the Chamber of Mines of Zimbabwe, commented that the chamber was continuing to lobby the government over the proposed changes.

Specific areas highlighted was the scrapping of the requirement that platinum miners had to sell 51% of their companies to local investors in terms of an indigenisation policy through which Zimbabwe had wanted to retain domestic control over production of what it considered a strategically important mineral.

Zimbabwe finance minister, Mthuli Ncube, announced early in March during an interview with Bloomberg Television that this requirement was to be scrapped.

Kambamura repeated that commitment today stating foreign companies would be able to own 100% of their platinum mining ventures in the country if they wanted.

But, in his address, Manhando said the Chamber of Mines wanted to see the existing indigenisation legislation, which also affects diamond mines, officially scrapped and replaced with the new measures “… so that industry players will come in”.

“These two require a lot of capital and if you put restrictions on them I don’t think you will be able to attract a lot of investment. We continue to lobby the government to address this officially,” he said.

Asked why the chamber was still lobbying government on such indigenisation regulations –  after comments by finance minister Ncube and deputy mines minister Kambamura that they were being scrapped – Manhando said he wanted to see the new legislation passed by parliament and the new regulations actually implemented.

Kambamura replied that this would happen “… very soon, like yesterday”.

In his address Kambamura said his ministry’s ‘vision’ was for the mining sector to earn $12bn in revenues by 2020, rising to $20bn by 2030.

Key minerals to be exploited to reach these targets included gold, platinum group metals and diamonds. Zimbabwe’s gold production was expected to reach 100 tons a year by 2023 compared with a gold production target of 40t for 2019.

But it seems one of the major negative factors affecting gold mining investment in Zimbabwe – the legal requirement for gold miners to sell their output to the Government through an agency – Fidelity Printers –  is not going to be ended anytime soon.

The official gold miners are charged a fee for doing this and do not get full value for their  gold production. They are at a disadvantage to Zimbabwe’s booming informal gold mining sector which avoids this requirement through dealing on the black market and pays no tax or royalties to the state.

Kambamura said there were “several engagements” underway with government to open up gold sales avenues to “other players”. But he added: “We are in a transitional period and gold is the major contributor for foreign currency so currently all gold production will be delivered to Fidelity Printers”.

Asked how the Zimbabwe government intended bringing the informal miners into the official gold sector, Kambamura replied: “We have noted that there are a lot of leakages from that sector and the informal sector will be recognised in the amended mines and minerals act.

“Government will formalise the sector through making sure they are mining on registered claims and that their production is accounted for. Government will also come up with gold service centres throughout the provinces to mobilise gold deliveries to Government.”

The post Zimbabwe miners want Mnangagwa’s government to turn words into action appeared first on Miningmx.

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UK human rights attorney Leigh Day said a UK Supreme Court ruling today was a reminder to the world’s mining companies that undertakings they make about the well-being of communities and environment in which they operate should not be viewed as ‘reputational polish’ but commitments requiring action.

“I hope this judgment will send a strong message to other large multinationals that their CSR [corporate social responsibility] policies should not just be seen as a polish for their reputation but as important commitments that they must put into action,” said the firm’s senior partner, Martyn Day.

This follows a ruling today which ordered a claim made by Leigh Day on behalf of about 2,000 villagers allegedly negatively affected by mining operations undertaken by Vedanta subsidiary, Konkola Copper Mines (KCM) in Zambia could be heard in the UK courts.

The attorney’s argument, which was accepted by the Supreme Court, was that the claim could not be heard adequately in Zambia owing to a lack of legal expertise and a lack of funding for such claimants in the southern African country.

The claimants allege that as a result of the toxic effluent discharge from the Nchanga Copper Mine which is run by KCM they have suffered loss of livelihoods through damage to the land and waterways and health problems through having to consume and use polluted water, said Leigh Day in a statement.

Now that jurisdiction has been determined their claims will be heard in the High Court at a date to be determined, it added.

As part of the judgment today the Supreme Court also ruled that companies can be held to account for the commitments they make publicly regarding their subsidiaries and their commitments to the communities they serve.

“After four years fighting for this case to be heard by the English courts we are delighted that our clients’ case can now go ahead in the UK where there is a real opportunity for justice,” said Oliver Holland, a solicitor at Leigh Day.

“Our clients argued that as the UK-based parent company of KCM, Vedanta also had a duty of care towards them and should be held responsible for the damage they allege has been caused by the mine,” he said. “The court has ruled today that Vedanta cannot merely pay lip service to these statements and must be held accountable for them.”

In a statement, Vedanta said that the court judgement was procedural and was not a judgment on the merits of the claims. “Vedanta and KCM will defend themselves against any such claims at the appropriate time,” the group said.

The post UK court ruling on Vedanta a reminder to mining firms of “duty of care”, says Leigh Day appeared first on Miningmx.

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SIBANYE-Stillwater is to place shares worth R1.8bn in an effort to minimise the impact on its balance sheet of the ongoing strike at its gold mines and to head-off potential disruptions that may flow from wage negotiations in the South African platinum sector.

Up to 108.9 million shares would be placed by means of an accelerated book-build with institutions, equal to 5% of the company’s share capital and the maximum it is allowed to sell for cash. The proceeds will be put to debt reduction taking net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) to a ratio 2.3x from 2.5x currently.

The group, which last year used $400m (R5.6bn) of some $500m raised by selling metals in a so-called streaming deal to lower debt, said the economics of the industry had improved owing to rand weakness and better platinum group metal (PGM) pricing.

But the strike waged by the Association of Mineworkers & Construction Union (AMCU) at its gold mines since November and “… the commencement of upcoming South African PGM wage negotiations at the end of Q2 (second quarter), pose potential risks that require due consideration,” it said.

In the event there were no disruptions from wage negotiations, the share placement would be a segue to the resumption of dividends, the company said. “The new proceeds from the placing will enhance balance sheet flexibility and ensure that group leverage is appropriately reduced,” the company said.

“Management has confirmed that should these uncertain events be successfully navigated and appropriate gearing levels maintained, the resumption of dividend payments, in line with the existing dividend policy, are anticipated,” it added.

In its announcement, Sibanye-Stillwater also described an uninspiring first quarter operational performance in which its US-based Stillwater mine got off to a slower than anticipated start to the financial, compounding group problems. Stillwater’s production guidance was unchanged, however.

The South African platinum mines at Rustenburg produced 234,000 ounces in PGMs which was in line with guidance. The focus, however, was on the gold mines where AMCU has refused to accept a three-year wage offer signed by rival unions including the National Union of Mineworkers (NUM). The strike, now approaching its fifth month, had resulted in the death of nine people and significant damage to property.

At some 104,000 ounces for the quarter, production was 90% of anticipated production levels, but only 36% the level of production of the first quarter in the previous financial year. “Unit operating and all-in sustaining costs will be negatively impacted by the reduced production levels,” Sibanye-Stillwater said.

Joseph Mathunjwa, president of AMCU, steadfastly refused to bow to pressure today despite attempts to negotiate a compromise, saying his union would not accept the Sibanye-Stillwater wage offer. Instead, he styled Neal Froneman, CEO of Sibanye-Stillwater, as a bastion of white privilege.

“Neal Froneman and his Mafia are the last battalion of exploiters. If you look where they are coming from it’s Cecil John Rhodes and Charles Rudd from Gold Fields,” said Mathunjwa during a public conversation with Bernard Swanepoel, a former CEO of Harmony Gold, during the Platinum Group Metals Industry Day investment conference.

(Rudd famously negotiated the Rudd Concession on mineral exploration from Matabele chief Lobengula in 1888 which Rhodes subsequently used to justify an invasion of the country which was subsequently named after him as Rhodesia but became Zimbabwe  in 1980.)

Mathunjwa continued: “When they unbundled at Gold Fields, Froneman came up with Sibanye. He never left the learnings of Cecil Rhodes. He was groomed and brought up under those circumstances.”

The post Sibanye-Stillwater prepares for worst ahead of PGM wage talks with R1.8bn share sale appeared first on Miningmx.

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THIRD cycle diamond sales for Anglo American-controlled De Beers totalled $575m, just over $25m more than at the equivalent  the group said in an announcement today.

“As we move into the second quarter of the year, we saw a continuation of stable demand for our rough diamonds during the third cycle of 2019,” said Bruce Cleaver, De Beers CEO. Sales in the second cycle of the year were $496m.

In terms of the first three cycles of the year, revenue was tracking 10% below revenue year-on-year. However, sales had moved back to “a more normalised” position, according to RBC Capital Markets in a note.

“We continue to expect that a tightening of recent surplus conditions should help to boost prices in the second half,” the bank said, adding that Anglo American, which owns 85% of De Beers, was it “favoured exposure” owing to higher growth potential than its peer group, better diversification and “more compelling valuation”.

De Beers CEO, Bruce Cleaver, said earlier this year that the diamond market was in a good position despite lower pricing for the smaller carat diamonds.

“If you look, for a start, at the growth in diamond jewellery consumption in the US in the last four or five years, you’ll find it actually has gone up year-on-year. So at a consumer level, there has been increased demand in the main market,” Cleaver said.

“If you also look at supply over the last three to four years, there has been a reasonable increase of supply over the same period,” he added. “We think that peak [diamond production] is about now, or it may be in a few months’ time.

“But it’s not years out”.

The post De Beers diamond sales moving to “more normalised” position in 2019 appeared first on Miningmx.

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ASSOCIATION of Mineworkers and Construction Union (AMCU) president, Joseph Mathunjwa, lived up to his billing as “a s**t-stirrer of note” by chairman, Bernard Swanepoel, when he launched an all-out attack on Sibanye-Stillwater CEO, Neal Froneman in Johannesburg today.

Introducing Mathunjwa to the Platinum Group Metals Industry Day investment conference Swanepoel commented: “Joseph’s official CV should say s**t-stirrer of note; kicked out of the National Union of Mineworkers by (current mines minister) Gwede Mantashe”.

“When you get kicked by Gwede out of a bunch of s**t-stirrers you must be a world-class s**t-stirrer,” he said.

Mathunjwa began by stating that “… it would be wrong to reduce these challenges (the four-month long strike by AMCU on Sibanye-Stillwater’s gold mine) to myself and Froneman. That’s not the case.”

But he then compared Froneman to the imperialist, Cecil John Rhodes, commenting: “Neal Froneman and his Mafia are the last battalion of exploiters. If you look where they are coming from it’s Cecil John Rhodes and Charles Rudd from Gold Fields.”

(Rudd famously negotiated the Rudd Concession on mineral exploration from Matabele chief Lobengula in 1888 which Rhodes subsequently used to justify an invasion of the country which was subsequently named after him as Rhodesia but became  Zimbabwe  in 1980.)

Mathunjwa continued: “When they unbundled at Gold Fields, Froneman came up with Sibanye. He never left the learnings of Cecil Rhodes. He was groomed and brought up under those circumstances.”

He then broadened his attack to include the current ANC government under the leadership of Cyril Ramaphosa and the Minerals Council which he claimed was no different from the former Chamber of Mines. “The culture has not changed since 1902,” he said.

CONSPIRACY

The AMCU strike on Sibanye-Stillwater’s gold mines could have already been resolved except for the fact that “… the State – Cyril Ramaphosa’s government – is helping Sibanye to break the AMCU strike. We have evidence of this. They have this toxic relationship as if they have never learnt anything from Marikana”.

Mathunjwa added: “Froneman and the State have this toxic relation where the Nyalas and Casspirs (types of armoured personnel carriers) of the State are serviced by Froneman in his workshop. They have an unholy alliance.”

Mathunjwa also attacked the current South African democracy and South African business in general claiming that “… nothing had changed in the country since 1994”, in particular the situation facing mineworkers. “Corruption, when it is done by the white man, is not corruption: it’s a business transaction. When it’s done by the black man, then it’s corruption.”

Questioned by Swanepoel over whether he had political ambitions, Mathunjwa replied: “When the former State President Jacob Zuma was removed he was not removed by the ANC, he was removed by business. We see the government embracing openly business at the expense of its own people. You cannot deny this. We saw it at Marikana in the Lonmin massacre and we have seen it recently at Sibanye.”

Asked by Swanepoel whether that meant AMCU would not be supporting the ANC in the upcoming elections, Mathujwa replied that AMCU had “not made a call” on which political party it might support, but that call might be made on May 1.

The post AMCU’s Mathunjwa stokes battle with Neal Froneman in ‘Cecil John Rhodes’ jibe appeared first on Miningmx.

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THE platinum miners had to invest in growing market demand to ensure the continued viability of their industry and the key priority was to stop the current decline in platinum jewellery demand in China.

That’s according to Anglo American Platinum (AngloPat) CEO, Chris Griffith, who told delegates at the PGMs (Platinum Group Metals) Industry Day conference held today in Johannesburg that the Chinese jewellery market was falling at a rate of between 100,000 ounces and 200,000 oz of platinum annually.

Griffith commented: “The solution for this industry is not to kick the tyres at some mine to reduce costs … the solution is to create additional demand and very few industries have that potential”.

Asked by Nedbank analyst, Leon Esterhuizen, why platinum miners should not instead focus on their traditional response to rising prices – which was to increase output – Griffith replied: “We will make far more money through investing in demand than by investing in new supply.

“We are all groomed as miners to think like that (to grow supply), but we can reap immense profits over the next five to ten years by first focussing on putting money into demand.

“That turns on really quickly, much quicker than we can respond on the mining front. Reality on the mining front is that the ability to bring metal to the market rapidly is not there. My message to miners is to invest in demand first and we will make incredible amounts of money as that demand comes and then supply will catch up”.

Griffith said research from past performance had shown that “… the best lever we can pull to grow demand for platinum is by stimulating jewellery demand. This gets us the best return by a country mile on our marketing spend”.

Pointing to the initiatives launched by industry marketing arm the Platinum Guild International (PGI) in Japan in the Eighties and China in the Nineties, Griffith said this had delivered more than 1.5 million oz of platinum demand a year.

“Market development works and we need to support and fund the PGI to address the declining China jewellery sector. This still offers the single, biggest growth opportunity globally. We simply cannot allow the platinum jewellery market in China to continue losing between 100,000 oz and 200,000 oz of platinum annually which is equivalent to a medium-sized platinum mine.

“The PGI is ready with a commercial plan for Chinese tier 2 and tier 3 cities that will increase demand by as much as 620,000 oz per year which will cost us another $40m.”

Griffith said it was crucial for the platinum producers to act now “… while we have the basket price in our favour”.

That was a reference to the improvement in financial conditions for the platinum miners over the past year from a situation where the platinum industry was described as being “… in a crisis” at the same conference in April 2018.

Griffith pointed out that, in 2017, around 65% of the South African platinum industry was loss-making. The increase in the prices of rhodium and palladium over the past year had resulted in a situation where all the mines were now back in the black.

The post Amplats urges PGM sector to focus on demand instead of growing production appeared first on Miningmx.

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ANGLO American said it would bin the $3bn expansion of its Los Bronces copper mine in Chile if “… the public protests against it”, said Bloomberg News, citing Henni Faul, who heads the UK-listed mining group’s copper business.

“All of our data proves we can mine that resource without doing any damage to the glaciers and without affecting the ground water,” he said. “We will not mine it if there are any other indications; we will not take the project forward.”

Los Bronces, the largest copper mine operated by Anglo, will decline in five years as ore grades decrease. The output expansion at the site, which has been mined for over 150 years, could take annual production from 369,500 tons last year to about 400,000, said Bloomberg News.

The company plans to use new technology to increase efficiency and to dig underground tunnels to avoid impact on the nearby glaciers.

“We’ve been working on this for six years and we trust we have the best scientific input,” Faul said. “If the public protests against it, we can’t take that forward,” Faul said. “We can’t force anyone’s arm,” he said.

The post Anglo will walk from $3bn Los Bronces expansion if “public protests” appeared first on Miningmx.

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