/ 28 March 2006

Kumba: Technical skills a challenge for mining

The shortage of technically trained personnel, especially among women, was a challenge for the South African mining industry and more must to done to address South Africa’s skills shortage, Kumba Resources chairman Allen Morgan said.

The group firmly believed that the best form of empowerment was training people and Kumba Resources estimated that it trained almost 12% of engineering learners in South Africa, Morgan added in the group’s 2005 annual report.

Kumba spent almost 6% of total payroll on training and development during the year, above the stipulated level of 1%, Kumba Resources chief executive Dr Fauconnier said.

In the past 30 years, South Africa’s annual intake of apprentices had plummeted from 30 000 to 3 000 and the training of apprentices was an issue South Africa must address urgently — and with sufficient resources — to prevent it becoming a national crisis, he added.

South Africa’s escalating current-account deficit and the continuous need for net foreign capital inflows to finance the deficit could pose a risk to the outlook for business confidence in the year ahead, Morgan wrote.

“We trust that the South African Reserve Bank will continue to achieve success in keeping inflation within its target range, while allowing interest rates to remain at levels that support South Africa’s economic growth,” he added.

The South African government’s R180-billion extended-infrastructure development programme was welcomed, as was an acceleration of its momentum, which would do much to fuel job creation in South Africa and support the national goal of a 6% growth rate, Morgan wrote.

Kumba had submitted its applications for the conversion of its old-order to new-order mining rights.

“With the appropriate ownership structure soon to be in place, applications should be ratified once our empowerment transaction is finalised,” Fauconnier said.

Kumba was set to be split in two to form two separately listed entities, Kumba Iron Ore and Exxaro Resources, which would also include Eyesizwe Coal’s assets as well as an option to buy certain of Anglo American’s assets.

“In Kumba Iron Ore, shareholders have the opportunity to participate in the JSE’s first pure iron-ore stock and its solid growth potential,” Fauconnier said.

By mid-2006, the two companies are to be listed on the JSE.

“The outlook for Kumba’s commodities is somewhat mixed, with supply and demand factors implying another year of price increases in iron ore, zinc and zircon.

“Conversely, the continued shortage of zinc concentrate will maintain pressure on treatment charges, which affects Zincor’s results. With the supply surplus in the titanium dioxide feedstock market persisting, no price increases are expected. Greater balance in the coal market should see coal prices declining somewhat from their record levels,” Fauconnier said. — I-Net Bridge