Thursday, April 29, 2010

Blacks and Mining in South Africa

The South African mining industry is still predominantly white controlled. Unlike most countries in the world, private individuals own most of South Africa’s mineral rights (typically farmers and large mining companies who have mineral right options). Currently, two thirds of South Africa’s mineral rights are privately owned, with the remainder vested in the State. This situation has effectively prevented expanding minerals development under Black ownership via two processes:

1) The owner of the mineral rights (usually farmers) refuses to allow access to the property, as he owns these rights.

2) Often farms are heavily subdivided, thus making it virtually impossible to locate the rightful owners.

A new emphasis is being placed on stimulating black empowerment in the mining industry. Several black or union owned firms are now beginning to play an important role in the industry. This is particularly the case following the impending legislation of the Minerals Bill that favours involvement of previously disadvantaged communities in South Africa's mineral resources.

Anglo American’s unbundling of JCI was seen as the first step in black empowerment in the South African mining industry. However, this failed to takeoff and as a result, JCI has ended up a shell of its former self, composed of a few gold property holdings and investments.

Mvelaphanda, with Tokyo Sexwale, a prominent black businessman at the helm, has become one of South Africa's most successful empowerment resource companies. To date it has acquired interests in developing platinum, energy and diamond resources in South Africa.

African Rainbow Minerals (ARM), a company formed in 1997 by Patrice Motsepe acquired several shafts from AngloGolds Vaal Reefs. ARM are also jointly developing a platinum mine with Anglo Platinum as well as entering a joint venture with Harmony Gold to exploit several Free State assets acquired from AngloGold.

The entry of foreign investment into South Africa has been slow since the country's first democratic elections in 1994. This has been due to a variety of reasons including the minerals legislation, uncertainty over the economic situation and the high crime rate. However, the situation is changing and many junior exploration companies are now active in developing several small to medium scale operations, mainly in diamonds, gold and platinum. (Mbendi)

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