Mining company surprised by Shabangu’s action
Source : Independent Newspapers
A waterfall in the Mkambati Nature Reserve plunges towards unspoiled Wild Coast beaches. Although the proposed mining operation is located just outside the reserve, several river estuaries in the area are near-pristine and there are fears that if Xolobeni goes ahead, it is just a matter of time before other parts of the coast are mined.
Australian-listed mining firm Mineral Resources Commodities (MRC) appeared unprepared for news that its licence to mine titanium in the Eastern Cape had been revoked, almost three years to the day after it was granted.
The Legal Resources Centre made public a stamped copy of a letter from Mineral Resources Minister Susan Shabangu dated May 17, in which she withdrew a mining right granted to MRC subsidiary Transworld Energy and Mineral Resources in June 2008 to mine the Kwinyana block of the Xolobeni area.
But MRC simply told shareholders this week that it could “neither confirm nor deny” media reports on the withdrawal.
“The company can neither confirm nor deny the information contained within the articles as it has not been able to meet with the minister nor has it been advised of any decision.
The company will update the market upon any formal notification,” MRC said in a note to shareholders on Wednesday, after the reports emerged. In the letter that MRC could neither confirm nor deny, Shabangu revoked her department’s earlier licensing decision on the grounds that several environmental issues were outstanding in a directive issued in 2008. But she gave the company a three-month window to submit information.
It is unclear what course of action MRC now intends following. Its South African representative, John Barnes, resigned a month before news broke that the licence had been revoked. But despite Shabangu’s odd contention that MRC took “all reasonable steps to consult with interested and affected parties” – she instead revoked the licence on failure to honour environmental commitments – it is clear that any new bid to mine the area will meet strong community resistance.
The Human Rights Commission has found that consultation was lacking, while MRC’s black economic empowerment partner, Xolco, was caught submitting a list of forged and fraudulent names of residents.
Commodity climb
There are signs Africa is shaking off the commodity curse. The prospects for the continent, now in the spotlight as an investment destination, are improving because of changes in the shape of the economies in the region. Credit rating agency Moody’s yesterday released a report identifying two important trends, which it says “stand out as qualitatively distinct from past growth periods”.
The first is the emergence of a broad middle class, “with significant discretionary spending power”.
After two decades of stagnation, per capita incomes rose over the past 10 years. And Moody’s says the trend is sustainable because growth is becoming more equitable. In other words, the proceeds of growth are not simply siphoned off into the wallets of the head honchos but the benefits are being felt more widely. “Poverty levels declined by 30 percent between the mid-1990s and the mid 2000s and are projected to fall by a further 28 percent by 2015,” says Moody’s. The decline in poverty has been so broad based that it has affected countries recently in conflict, such as Mozambique, Rwanda and Uganda.
The second reason growth can be sustained is that it has become more diverse. “Spurred on by the spending power of the middle class consumer, the domestic private sector is growing rapidly in sectors such as telecoms, banking and retail, accounting for the growth of resource-poor countries such as Kenya and Mozambique.” And, in some resource-rich countries like Nigeria and Ghana, these sectors have overtaken natural resources as the main drivers of growth.
The development is freeing Africa from the shackles of the so-called Dutch disease – a situation in which income from commodity exports puts upward pressure on the currency, hampering prospects for manufactured exports which become too costly to compete.
page 5 New leaders
Minister of Public Enterprises Malusi Gigaba flexed his muscles this week and proved to everyone that he meant business when he said the shareholder must get closer to the state-owned enterprises.
Gigaba changed the boards of Eskom and Denel and he is expected to remove the board chairman of Transnet, Mafika Mkwanazi, following his appointment as a new non-executive director at Eskom.
Gigaba is yet to inform the public of the reasons for this change, but media speculation is that the problem at Eskom was possibly that the board and management were too independent for the minister’s liking. At Denel it seems Gigaba is trying to put in place people who will assist management in turning the defence parastatal around. It is rather amazing that the person who will lead the board has been part of the old board for five years.
Then there is Transnet. Apparently, the biggest problem there is that Mkwanazi knows too much about the business, having held the position of group chief executive previously. Other sources say Brian Molefe, the head who is new in the company and in the transport and logistics field, is uncomfortable with having a boss who knows too much.
Molefe has never come across as an insecure person. In an ideal world, Mkwanazi and Molefe should complement each other but maybe the fear was that the former would not know where to draw the line and undermine the latter’s authority.
It is puzzling that Gigaba was able to announce a board within six months of taking up the public enterprises portfolio when his predecessor, Barbara Hogan, had been unable to do this for 16 months. Maybe the board was imposed on Gigaba.
One thing is for sure, the Mkwanazi-led board has not put a foot wrong since it took over and is credited for stabilising the leadership vacuum that existed at Transnet for close to two years. Naturally, the public is not privy to behind-the-scenes drama and only time will tell why Mkwanazi fell out of favour with Gigaba.
Edited by Peter DeIonno.
Contributions from Ingi Salgado, Ethel Hazelhurst and Slindile Khanyile.
Posted on June 14th, 2011 by Louis
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