10.08.10 Menas Associates
News Digest: Africa Mining Comment & Analysis - South Africa
South African Miners
London-listed PGM miner, Lonmin, on 5 August announced that it had been instructed by the South African Department for Mineral Resources (DMR) to immediately cease sales of PGM-associated minerals in South Africa. The
instruction was issued after the DMR granted prospecting rights for associated minerals within Lonmin's holdings to
a second company - Keysha Investments 220, which is reportedly linked to a
former Lonmin director.
(Sources: Various)
Chris Melville, Africa mining consultant with Menas Associates today commented:
"This is the second case in less than six months where the DMR has awarded
prospecting rights over an area of an existing mine to largely-unknown third
parties. For it to happen once could be an isolated case; for it to happen
twice,
it looks worryingly like the start of a trend".
"Such decisions by the DMR are only likely to reinforce the concerns of
those who regard the MPRDA and the Mining Charter as a retrograde step for
security
of tenure in South Africa's mining industry".
"Moving to a system based on government licence was always going to expose
licence awards to the more uneven discretion of ministers and departments of
state. Likewise, the requirement to transfer mining titles into 'new order
rights'
will always create opportunities for third parties to get their foot in the
door".
"The concern going forward is whether such gaps become systematically
exploited by vested interests, in a manner we've witnessed in a number of
other, less
well-institutionalised mining regimes in Africa and elsewhere. This isn't
inevitable in the South African context, but we may be at something of a
crossroads,
both politically and in terms of the evolution of the regulatory environment in
South Africa".
Background
According to its media release, Lonmin applied for 'new order rights' over the
PGM-associated minerals in late 2009, having formerly mined and marketed
associated minerals from its operations as it was entitled to under previous
legislation. The company claims it was unable to obtain these rights because a
prospecting
permit over a small portion of its property had been applied for in March 2009
by Keysha Investments 220. This right was awarded in May 2010. Keysha is reportedly connected to HolGoun, whose CEO is Dr Sivi Gounden, a former Lonmin director, who left the Lonmin board in October 2009.
© 2010 Menas Associates