WITH the diamond industry in decline, state-owned diamond mining company Alexkor is to enter the coal business, potentially competing with other state-owned coal miners that supply Eskom. It intends partnering with emerging black coal miners to supply Eskom with 10-million tonnes of coal a year and lime for its desulphurisation plants. The diamond miner’s new thrust, announced by Public Enterprises Deputy Minister Bulelani Magwanishe on Friday, comes after Public Enterprises Minister Malusi Gigaba in 2012 launched a strategy to boost the role of black emerging miners in providing the coal Eskom needs to ensure long-term security of supply. But Alexkor, which does not yet have any coal prospecting or mining properties, appears to be duplicating the mandate of state-owned coal mining company African Exploration, Mining and Finance Corporation (AEMFC), which is producing coal for Eskom from the Vlakfontein mine near Witbank, and plans expansions. While Alexkor reports to the Department of Public Enterprises, African Exploration is switching from the Department of Energy to the Department of Mineral Resources. "It looks as if several different departments are going into business on their own," Democratic Alliance mining spokesman James Lorimer said. "I think this is a confusion and I cannot see it ending well." Webber Wentzel partner Peter Leon said: "This really does not make economic sense or seem to be an efficient allocation of economic resources." "While AEMFC is the principal state mining company, it has largely if not exclusively concentrated on coal exploration and production. It does not seem to make sense to set up Alexkor, a diamond producer, in competition with it," he said. Answering questions at a press briefing after Alexkor’s annual general meeting in Pretoria, Mr Magwanishe said there was no potential conflict between Alexkor and African Exploration. Eskom would need about 60-million tonnes a year of coal, so there was enough room for African Exploration, the private sector and Alexkor to supply it. "It is our responsibility as the state to ensure we are not involved in another energy crisis. Collaboration amongst state-owned entities to assist each other is very important," he said. Public enterprises director-general Tshediso Matona said the state intended to eventually consolidate its portfolio of state-owned enterprises. However, African Exploration is still setting itself up, "as it were", while Alexkor is already operational and ready to pursue opportunities. African Exploration GM: strategy and planning Sicelo Sikakane said Alexkor’s plans had not been discussed with the state-owned company. However, he confirmed that African Exploration is operational. It exceeded its target of 1.5-million tonnes of sales to Eskom last year and is ramping up to double output from its Vlakfontein mine, where it employs 300 people. African Exploration made after-tax profit of R71.2m on turnover of R295m in the year to March. "We would welcome collaboration with other state-owned entities to utilise our collective abilities for the good of our economy," Mr Sikakane said. Preliminary figures released by Alexkor show a profit of R29.7m in the year to March, from a loss before tax of R14.8 m in 2012, mainly due to interest on a R350m cash injection from the Treasury at the end of December. Alexkor CEO Percy Khoza said the plan was to partner with emerging black coal miners and assist them with expertise in mining and marketing. Alexkor will not necessarily seek to be the majority shareholder in these joint ventures, but would like an element of managerial control. Mr Magwanishe said South Africa’s diamond industry is in structural decline, with production falling to about 7-million carats last year from a peak of 15-million carats in 2005. In its current form, Alexkor was not sustainable. It had to "adapt or die". Alexkor has marine and diamond mining operations in the Richtersveld, where the community won a land claim against the company in 2007. A subsequent joint venture with the Richtersveld community was put in place which produced 35,358 carats last year, above its budgeted 34,550 carats, and mined at sea for 22 days, from eight last year. Mr Magwanishe said the company has spent R50m on a dense media separation plant which would enable it to start exploring its resources in the current financial year, creating about 200 jobs. Alexkor chairman Rafique Bagus said the company was in talks with various potential partners from India who had expressed an interest in setting up a beneficiation plant in the area.
Posted on: Mon, 16 Sep 2013 23:10:21 +0000
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