New Deal to Give Blacks Major Mining Stake
Namibian groups PE Minerals and EPIA Investment Holdings, both headed by Namibian tycoon Aaron Mushimba, will soon snap up a 49.9 percent in Rosh Pinah zinc corporation, in one of the country’s biggest empowerment deals outside a government enabling legislation on black economic empowerment (BEE).
Rosh Pinah, a leading base metals producer, is owned 94 percent by Johannesburg Stock Exchange (JSE) quoted resources group, Exxaro Resources.
PE Minerals, the front-runner in the Namibianisation of the zinc and lead mining sector, already owns slightly above 6 percent plus the mineral rights.
Negotiations for the disposal of 49.9 percent stake in Rosh Pinah to Namibian empowerment groups, which have been ongoing since 1995, would be sealed before December, executives from Exxaro Resources and PE Minerals said this week.
Exxaro Resources executive general manager base metals and industrial minerals, Mxoliso Mgojo, who was in Namibia earlier this week, said that the disposal of the 49.9 percent stake would be concluded before year end.
“This would immensely benefit the Namibian consortiums, considering the international prices of zinc, which have been holding high during the past two years,” Mgojo said. “For society to remain balanced, empowerment is critical.”
Rosh Pinah has an annual capacity of 160 000 tonnes of zinc, which is fed into the Zincor refinery in South Africa.
“Further exploration drilling at Rosh Pinah has extended the mine’s life span by another seven years,” PE Minerals co-ordinator Coen Wium told The Southern Times.
Prices of zinc on the London Metal Exchange (LME) are currently hovering around US$3 725 per tonne.
A drop in inventories in LME warehouses could continue to propel the prices of zinc and other base metals upwards.
Analysts say that despite investors continuing to look to traditional minerals, such as gold for investment, in recent years it has been base metals which have seen the strongest price rises.
The consumption of base metals is, unlike that of gold, dependent on supply and demand factors and linked to economic growth worldwide.
With economies such as that of China averaging 11 percent economic growth per annum, analysts say that the price of base metals, zinc included, would continue to shore up.
The price of base metals is also determined by the cost and time involved in developing a new mine. This can take up to ten years and a minimum of four, industry experts say.
The major base metal mining companies are currently fully occupied trying to complement the fall-off in supply from aging operations.
Analysts say that the time factor is particularly relevant as four years ago base metals prices were static and mining companies were loath to commit themselves to new operations.
Since 2003, the price of zinc has increased fourfold, market watchers say.
Wium said the discovery of additional ore reserves at Rosh Pinah had prolonged the lifespan of the mine.
He added that he would estimate an extension of the lifespan to ten years from the current seven, saying he was confident by the end of the year even more ore reserves would have been discovered.
Wium said that PE Minerals and EPIA Investment Holdings had already secured enough financial muscle from financial institutions to obtain the 49.9 percent stake in Rosh Pinah.
“The negotiations are so far advanced and we feel confident that we will conclude the Namibianisation process this year,” Wium said.
“We also believe that with the high prices of commodities, zinc will remain at a level where the mine will be profitable,” Wium said.
A plus for the deal is the fact that the empowerment group would also focus on developing the town around the mine.
The investors would also encourage locals to diversify into the tourism sector, Wium said.
“This Namibianisation is much broader. We are also concerned about the survival of the town after the mine has reached its life span,” Wium added.
Should the deal be concluded, Exxaro would retain management and operational control.
Wium could not disclose how much the 49.9 percent would cost the local groups, saying the price would be market related.
“Final value of the transaction will be determined by the market and commodity prices prevailing at that time,” Wium said.
(Courtesy of Southern Times)