Black empowerment may still leave a major gold mine under white control, writes Max Gebhardt
ANGLO AMERICAN is lifting its stake in Johannesburg Consolidated Investment’s (JCI) gold mine Western Areas – a move which could ensure it remains the mine’s largest shareholder after JCI’s planned sale to black business. The corporation is refusing to comment on what it terms ”speculation”, but market sources say Anglo has been snapping up stock in Western Areas.
Anglo’s 1996 annual report shows the corporation, together with investment arm Amgold, directly owns 15,2% of Western Areas. Anglo’s 39,6% stake in JCI gives it, indirectly, another 13% of the mine.
Western Areas is widely viewed as JCI’s prize asset. It was the main profit producer for JCI’s gold stable in the year to June, earning R216,3-million before capital expenditure. Western Areas’ merger last year with the South Deep exploration project also created one of the world’s largest mineable orebodies. ”It’s the plum,” one mining executive says.
Analysts say Anglo’s decision to lift its stake may stem from Amgold’s decision to switch its interest into bigger mines with a longer life.
They add, however, that such activity will also affect the black empowerment plans for JCI. ”Anglo obviously wants to keep a meaningful stake,” one says.
Anglo and associate De Beers own 47% of JCI. Two groups – Nthato Motlana’s New Africa Investments Limited (Nail) and Mzi Khumalo’s Capital Alliance – have emerged as front- runners to buy it.
The race has accelerated following the conclusion last month of Anglo’s sale of 35% of industrial group Johnnic to the National Empowerment Consortium, led by Nail.
But the sharp rise in JCI’s share price – it has more than doubled in the past 17 months to R48 – has prompted fears on the JCI board that the black empowerment efforts could be stymied.
Real Africa Investments, once the front- runner, has already dropped out of the race, claiming the price tag is now too high. The deal is expected to cover 35% of JCI – currently worth R2,3-billion.
Nail deputy executive chairman Cyril Ramaphosa was in London this week attempting to finalise finance, apparently with United States bank Merrill Lynch. Capital Alliance is thought to have already secured the backing it needs.
The general consensus is that Anglo will not be prepared to offer a substantial discount on JCI’s share price – 5% is likely to be maximum.
Representative Michael Spicer says Nail and Capital Alliance made their initial pitches for JCI last Friday.
He says Anglo will not favour any proposal which includes stripping JCI of its assets. Its operations also include Consolidated Metallurgical Industries, Tavistock Colliery and a fledgling, but thriving African gold exploration business.
Analysts say JCI prefers Nail because of the political capital Ramaphosa can offer as JCI goes north of the Limpopo.
JCI representative Marc Gonsalves says the group is already deriving benefits in Africa from speculation that Ramaphosa might be the next chairman.
But concerns have been raised about Ramaphosa’s ability to divide his attention between JCI and Johnnic, where he is already chairman.
The prospect of Anglo allowing one group to dominate the JCI and Johnnic black empowerment deals is also in question. Many believe a partnership between Nail and Capital Alliance is likely.