Global resources group Anglo American (Anglo) has embraced black economic empowerment in South Africa, recently appointed Anglo deputy company executive in South Africa Lazarus Zim said an interview.
Black empowerment is one of the South African government’s key goals.
“We have laid the groundwork for significant transformation, both internally and externally. The fact that I’m here shows that Anglo is very serious about transformation … it is very high on the radar screen,” Zim said at the Mining Indaba.
In late July 2002 the draft mining empowerment charter was leaked, which shocked investors — both in South Africa and globally — and shook up the blue-blooded ranks of local mining.
Since then the empowerment charter, which requires mining companies to clear a number of empowerment hurdles to convert their mining licenses to the new order, has been finalised.
The Minerals and Petroleum Act, as well as its charter, is likely to become law as early as May this year.
However, Zim said Anglo’s commitment to empowerment pre-dated the mining charter.
Forty-four-year-old Zim is well established in business, having started with pay television channel M-Net in 1994. He reached the position of chief executive of M-Net Channel, MD of M-Net and chief executive of MIH South Africa.
For two years, before he joined Anglo in October last year, Zim was MD of MTN International.
That group has previously facilitated a number of empowerment deals including Johnnic, the formation of Patrice Motsepe’s African Rainbow Minerals, as well as those at Anglo American Platinum, in which Anglo has a stake of more than 70%.
“Anglo recognises empowerment as a strategic business imperative. It makes good business sense and it is good for the country,” Zim said.
Zim previously received a bursary from Anglo to study his Bachelor of Commerce at Fort Hare.
Anglo looking to capitalise on iron-ore opporurnity
Given the tremendous growth in demand for iron ore, mainly from China, Anglo sees Kumba Resources presenting a great opportunity for the group.
“The demand is huge for iron ore. It is a great opportunity for Anglo, working together with Kumba management,” Zim said.
China is the world’s number-one producer of steel with output in 2004 expected to climb 11% to 245-million tons from 220-million tons in 2003.
Global steel output is expected to exceed one billion tons in 2004, up from 960-million tons in 2003.
Behind Companhia Vale do Rio Doce of Brazil, BHP Billiton and Rio Tinto, Kumba is the world’s fourth-largest sea-borne exporter of iron ore.
Kumba could double its iron ore output, presently just less than 30-million tons per year, by 2009, Zim said.
Anglo is currently in talks with the South African government about its stake in Kumba, which now stands at 66,7% — above the previous gentleman’s agreement with the government that its stake would not exceed the 49% level.
Some analysts expect the government to allow Anglo to keep its two-thirds stake in Kumba, after having made some key concessions related to empowerment and investment in the mining of Northern Cape iron ore resources, as well as the establishment of related downstream operations.
“Anglo is talking to the South African government and discussions about iron ore continue. It is an ongoing dialogue, which is not event-driven. It is good, positive dialogue,” Zim added.
Anglo sees the South African government as a key partner in the development of the iron ore resources, Zim said.
“[Rail utility] Spoornet is a very key partner. What we need to do is to sit around the table [with Spoornet] and say this is what we want to achieve and how do we get there,” he added.
There has been recent speculation of a possible relationship or deal emerging between Anglo and Companhia Vale do Rio Doce, the world’s largest iron-ore producer.
Zim said he wasn’t aware of any such development, adding he had no comment to make. — I-Net Bridge