Markets ‘forced’ mine indaba

Shaken by the “savagery” of market reaction to a leaked black empowerment charter, the government has elevated the issue of empowerment in mining beyond the exclusive remit of Minister of Minerals and Energy Phumzile Mlambo-Ngcuka, analysts say.

“They now realise the charter has implications for the entire economy,” said an analyst who asked not to be named.

Mlambo-Ngcuka will be accompanied by Minister of Finance Trevor Manuel, Minister of Trade and Industry Alec Erwin and Minister of Labour Membathisi Mdladlana at a top-level powwow with Anglo American and De Beers next Wednesday.

President Thabo Mbeki, who is on leave and will not attend, set the date after a request from Anglo chairman Julian Ogilvie-Thompson.

Mbeki is understood to have asked industry leaders for the revival of the “four-a-side” between the government and the industry held at the height of acrimony around the Minerals and Petroleum Resources Development Bill in June.

A department source put a different spin on the involvement of the four ministers. Now, as in June, the president has deflected attempts to gain direct lobbying access to him by referring the matter to the Cabinet?s economics cluster.

Describing the industry’s approach as an “arm-twisting manoeuvre”, the source doubted the planned meeting would yield much beyond “grand pronouncements”.

Representing the industry next week will be Anglo CEO Tony Trahar, De Beers chairman Nicky Oppenheimer, AngloGold CEO Bobby Godsell and Barry Davidson, Anglo Platinum chairman.

Analysts said one of Mbeki’s key motives was to involve the industry in stabilising markets.

Mining stocks crashed two weeks ago after the leaking of the draft government empowerment charter proposing the transfer of 51% of mining assets into black hands over 10 years, and a 51% black interest in all new mining ventures.

The Johannesburg Securities Exchange (JSE) gold index fell 11,8% on the day the charter was leaked.

A joint “sector partnership” statement, representing government, the industry and labour, set out to reassure investors that the leaked draft was no more than a chopping block.

But markets remained sceptical. After a slight recovery, Anglo and Billiton continued to bleed this week, losing 7,7% and 4% respectively on the London exchange on Tuesday. Because of Anglo’s 65% exposure to South Africa, investors had switched to Billiton and Rio Tinto, analysts said.

Tuesday’s joint statement by Trahar and Oppenheimer, announcing the meeting with the government, lifted JSE sentiment, with Anglo and Billiton regaining 7% in value.

Analysts said that at Wednesday’s “summit”, Anglo and De Beers were likely to quiz the Cabinet ministers on whether empowerment was now considered so important that it ?trumped? the government’s stated commitment to market principles and sound macroeconomics.

They were likely to point out that major South African mining companies had a 70% foreign shareholding, and to argue that a 50% transfer into local hands would amount to large-scale forced disinvestment, with negative spin-offs for the current account, interest rates and the rand.

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