THE gold mine merger and acquisition (MA) game may be on again following comments by Harmony CEO Graham Briggs that his group would consider making an acquisition in South Africa if something suitable came up.
By “suitable” Briggs said he meant a mine that was generating cash and would not need a lot of capital ploughed into it. Naturally, he would not go into specifics, but there are not that many gold mines left in the country that meet Harmony’s stated requirements.
Top of the list for potential MA action has to be Sibanye’s Beatrix mine, which sits cheek by jowl in the Free State with Harmony’s Joel operation. The two mines should have been developed as one back in the late 1970s, but original owners JCI and Gencor could not agree who should get the management contract. That was critical under the old mining house system because of the associated management fees.
Then there’s the Carletonville area, where Harmony’s Kusasalethu mine sits in close proximity to Anglo-Gold Ashanti’s Mponeng, Tau Tona and Savuka operations (the three shafts that made up the former Western Deep Levels).
Any action there would depend on what new AngloGold CEO Srinivasan Venkatakrishnan eventually decides to do as part of his cost-cutting campaign; he said recently all options were on the table.
That situation is more complex. Savuka is a dog, and joined at the hip to the neighbouring Blyvooruitzicht mine in terms of dealing with water pumping liabilities for the region.
THE global ArcelorMittal group, the world’s largest steel maker, is still seeking to exit from its 50% stake in the R11bn Kalagadi Manganese mine, sinter and smelter project. It is to do this by selling to empowerment entrepreneur Daphne Mashile-Nkosi’s Kalahari Resources, which already owns 40% of the venture. The remaining 10% is held by the Industrial Development Corporation.
But while ArcelorMittal said late last year it would receive not less than R3.9bn for its stake — “subject to financing arrangements” — little has come of it, despite the deadline for a deal expiring in mid-February. Valérie Mella, ArcelorMittal’s investor relations specialist in London, says the conditions precedent to the sale have not been met, and the group continues to “hold the stake”. However, the steel maker is coy about whether there are any holding or other costs involved in this.
The Coega Development Corporation says the project’s prospective R4.2bn high-carbon ferromanganese smelter, to be built in the Coega industrial development zone near Port Elizabeth, is only in the environmental impact assessment stage. The proposed project also involves upgrading the railway line from Hotazel in the Northern Cape to the Eastern Cape port.
Ms Mashile-Nkosi is not answering e-mails in this regard.
• Dave Marrs edits Company Comment (firstname.lastname@example.org)