The bid by Harmony for Gold Fields is not good for an empowerment company like Mvelaphanda Resources, Mvela chairperson Tokyo Sexwale said on Thursday.
“The biggest losers are black people, black economic empowerment [BEE] players. We are the biggest losers because we don’t have the kind of chequebooks that old institutional investors have,” Sexwale said during a press conference.
Sexwale said he is looking to put a floor under the fall in Gold Fields’ share price and added that the fall in the share price is of concern to Mvelaphanda Resources.
Mvelaphanda Resources will also be looking to engage various Gold Fields shareholders, and next week Sexwale will be meeting with representatives of Russian mining company Norilsk Nickel, which is Gold Fields’ largest shareholder with a 20% stake in the group.
“I have been invited to Moscow, I will be seeing our friends Norilsk, next week,” Sexwale said.
“I trained in the [former] Soviet Union and I know some of them [the Norilsk Nickel representatives] personally, even [from] before this situation,” he added.
“We at Mvelaphanda will start to engage other [Gold Fields] shareholders,” he added.
“The shareholders of Gold Fields have now spoken and they have done so twice. Two weeks ago, they voted down the Harmony [early settlement] offer and this week, they voted down the Iamgold transaction,” Sexwale said.
Mvelaphanda Resources has a 15% stake in Gold Fields’ South African gold-mining operations, but doesn’t have a direct stake in the Gold Fields listed entity.
Mvelaphanda Resources bought the 15% stake for R4,1-billion.
Again on the issue of empowerment, Sexwale said the Harmony bid has again highlighted the difficulties that empowerment companies, like his own, face when they do not gain sufficient control of those companies into which they buy.
“There are very serious as well as critical lessons to be learnt for empowerment from this merger exercise. The lesson is that if empowerment companies aren’t in control of equity, they will forever remain not in control of destinies of the companies, in which they are involved,” Sexwale said.
Since the launch of the Harmony bid, both Harmony and Gold Fields have lost about R1-billion in shareholder value per week.
Gold Fields’ market capitalisation has fallen from R44-billion at the time of Harmony launching its bid, on October 18 2004, to R37-billion, while Harmony’s market capitalisation has declined from R28-billion to R21-billion rand, Sexwale said.
The National Union of Mineworkers has started to express reservations about the Harmony bid, terming it “pure shareholder greed”, he added.
Government officials have also expressed concerns about the Harmony bid, Sexwale said. — I-Net Bridge