The South African mining industry’s latest empowerment player had an eventful debut this week, with a flashy launch at Johannesburg’s Park Hyatt hotel graced by Minister of Minerals and Energy Phumzile Mlambo-Ngcuka — and a blistering attack by the National Union of Mineworkers (NUM).
Incwala Resources is a black-owned company that aims to evolve into a diversified resources player. It is 52,8% held by a consortium of six black investor groups with the balance held, at 23,6% each, by the Industrial Development Corporation and London-based Lonmin, the world’s third-largest primary producer of platinum.
The company is chaired, in a non-executive capacity, by former BHP Billiton CEO and dealmaker extraordinaire Brian Gilbertson. His deputy, seen as the prime mover, is Zanele Mavuso-Mbatha (34).
The empowerment consortium is led by a triumvirate of Ronnie Ntuli’s Andisa Capital, Mutle Mogoase’s Vantage Capital and the Dema Group, led by Mavuso-Mbatha and Dawn Marole, chairperson of Kumba Resources. Each of the groups hold 16,2% of the 52,8% controlling stake.
Speaking to the Mail & Guardian, Mavuso-Mbatha said the company’s vision is to be “a flagship for empowerment”. The company is the brainchild of Gilbertson and Lonmin chairperson Sir John Craven, who also sits on its board.
Lonmin, through its South African business Lonplats, and its South African partner Impala Platinum, facilitated Incwala’s first investment. This was through a sale of 18% of Lonplats to Incwala, with Lonmin holding the remaining 82%.
Lonplats has three mines in the Marikana village in Brits in the North West, as well as a smelter and refinery. The Bapo ba Mogale community, which lives in the village, represents the “broad-based” element of the consortium through a 2,8% holding in the controlling stake.
Other “broad-based” components are the South African Women in Mining Investment Holding (Sawimih), which holds 1,4%, and the Lonplats Employee Trust, representing 20 000 employees (13,3% of Incwala).
Despite these features, NUM general secretary Gwede Mantashe branded the deal “a fake” and the terms of the trust “insulting”. The trust holds a quarter of each of Andisa, Vantage and Dema’s 16,2% stake — which the veteran unionist complained represented only 1,8% of Lonplats.
A key union objection is the seven-year repayment period for the workers’ stake. “This is fake empowerment, because the so-called stake is a debt that can only be liquidated in seven years,” Mantashe said. “Our members are expected to work now and liquidate the debt for the benefit of future generations. There is nothing that should make us excited about this.”
Mavuso-Mbatha refused to react to Mantashe’s comments, saying only that “we believe this is a fantastic structure for all parties”. All consortium members were comfortable with their exposure and confident of meeting their repayment terms, she added.
The black investors put up $183-million through vendor financing provided by Lonmin and Implats, and by banks. Lonmin put up $95-million, including $5-million to fund Sawimih and the Employee Trust. The Industrial Development Corporation (IDC) put up $87-million, including $5-million to fund the Bapo community stake.
Mavuso-Mbatha cited the group’s quality of assets, low gearing and board composition as some of its strengths.
The mines in which it has a holding are set to produce a million ounces of platinum a year by 2008. The company has a gearing of 25%, allowing for a further borrowing for acquisitions to diversify. The board also includes IDC chief economist Lumkile Mondi and its chief investment officer, Raisibe Morathi.
Mavuso-Mbatha brings to her position five years of working in mergers and acquisitions in the resources sector of JP Morgan and Salomon Brothers in New York. She studied international economics at Mills College, in Oakland, California, while most of her secondary schooling was in Holland, where she was in exile with her family.
Over the past five years in South Africa, she has worked for ABT Associates consulting on policy for the government and restructuring for the private sector.
Mavuso-Mbatha said she would be involved at executive level and help recruit black staff, including a CEO to replace the incumbent Ian Farmer, executive director at Lonmin.
She will probably have to shoulder increasing responsibility, as Gilbertson recently took up the post of CEO at Siberian-Ural Aluminum in Moscow, where he will live. Asked how she will cope with this, Mavuso-Mbatha exclaimed: “Thank God for technology. Brian is always a phone call away.”