De Beers Chairman Nicky Oppenheimer said on Tuesday South Africa’s draft proposals to shake up the mining industry had set off some alarm bells, but he did not expect mines to be expropriated as some feared.
Oppenheimer also said the world’s biggest diamond group — which is 45% owned by Anglo American — had had a ”good” first half and was working to bring more black people on board at De Beers and in the wider industry.
De Beers reports its first half sales on August 12. In 2001 the group, which supplies two-thirds of the world’s uncut gems, had sales of $4,45-billion.
Last month South Africa approved a hotly contested Minerals Bill that aims to give blacks a larger role in the sector, which is one of the pillars of the economy but is still dominated by whites eight years after the end of apartheid.
Before the Bill was passed, De Beers said it could put R8,5-billion in investment at risk because it threatened mining firms’ security of tenure.
But the release last week of the draft Mining Charter — the meat on the Bill’s bones — for industry discussion has caused even more concern, with its clear targets and deadlines.
”I think this government knows full well that nationalisation of parts of the industry is a disaster. I don’t think we’ll end up with that,” Oppenheimer said.
Asked at a foreign correspondents’ briefing if he ruled out mine expropriations, he said: ”Absolutely.”
The draft of the mining charter says control of all new projects must rest with new black business within 10 years.
It also suggests that up to 30% of equity in existing operations must be given to black-owned mining businesses before licences to mine an expansion-related project are issued.
LEAK DODGY
”I don’t believe the intention is to stop De Beers prospecting,” Oppenheimer, whose family and the Botswana government own 55% of De Beers, said.
But he criticised the way details of the draft were leaked to the media last week. ”I think the whole thing is fraught with uncertainty. It seems to me this is a trial by government.”
News of the proposed charter sent mining shares sliding. This was despite the government’s insistence that the proposals were just a starting point for what were expected to be lengthy discussions with the industry and labour.
Oppenheimer acknowledged that South African miners needed to do more to make the industry more representative of the country, where whites only make up around 11% of the population.
And even though miners might not like the Mining Charter when it was eventually finalised, certainty would be welcome — particularly over the definition of black control and ownership.
Oppenheimer said there was still good potential to mine diamonds in South Africa, but Angola was ”one of the most prospective countries in the world”.
De Beers is still locked in talks with Angola after the two failed to renegotiate a deal which led to the suspension by De Beers in May 2001 of investments in the gem-rich country.
Oppenheimer said he hoped a European Commission review of De Beers’ marketing plans would soon be over. ”Talks with the EU are going well and we hope to reach finality soon,” he said on the ”supplier of choice” scheme to formalise its relationship with the so-called ”siteholders” who buy De Beers stones.
Oppenheimer said the group’s joint venture with luxury goods group LVMH would open its first jewellery store in London later this year, to capitalise on the De Beers brand. – Reuters