/ 26 November 2010

State widens hunt for mineral wealth

State-owned mining company African Exploration Mining and Finance Corporation (AEMFC) has received 27 prospecting licences from the department of mineral resources across seven provinces, 13 exclusively for coal and three for coal and uranium ore. But the licence applications also indicate that it is on the hunt for chrome, cobalt, gold, iron, copper, lead, manganese, nickel, lithium, and diamonds.

The applications indicate that the corporation is diversifying beyond minerals strategic to South Africa’s energy security needs — such as coal and uranium — into a wide range of metal ores and minerals.

This diversification will fuel speculation that the state is gradually seeking to extend its control over the country’s mineral wealth, while questions are bound to be raised about the role of government as both player and referee in the issuing of mineral prospecting rights.

The AEMFC was formed in 2007 as a fully owned subsidiary of the government-owned Central Energy Fund, while the government’s mineral resources department is responsible for issuing mineral prospecting rights.

This week the department said that “each application for a prospecting or mining right is assessed on its own merits for compliance with the provision of the [Mineral and Petroleum Resources Development] Act regardless of who the applicant is”.

However, in October 2008, the former minister of minerals and energy, Buyelwa Sonjica, posted a notice in the Government Gazette exempting the AEMFC from key provisions of the Act relating to “any activity to prospect, mine and the removal of any mineral for accumulating and stockpiling for purposes of security of supply”.

‘Security of supply’
With the rolling blackouts experienced in 2008 — caused by coal shortages — security of supply became a government priority.

For the AEMFC, the directive effectively removed the requirements that it apply for prospecting rights and permission to remove and dispose of minerals and for mining rights and permits. Other mining companies must undergo these processes.

However, the AEMFC must still meet environmental requirements and health and safety laws. It must also submit prospecting and mining work programmes, and a social and labour plan and prove it has access to financial resources and the technical ability to prospect or mine optimally.

Earlier this year AEMFC chief ­executive Sizwe Madondo told ­Business Day that “our investment strategy at the moment is to target minerals strategic to energy needs of the country, such as coal and uranium”. The range of minerals the AEMFC is now seeking suggests otherwise. Madondo did not respond to a request for comment.

Central Energy Fund spokesperson Mandla Pyala directed questions to Madondo. Media reports this week have highlighted the involvement of ANC front company Chancellor House in mineral prospecting.

One of these stated that Chancellor House had “netted rights to carry out prospecting at 560 sites in Northern Cape, North West and Mpumalanga”, while “applications to prospect at a further 400 sites are still under consideration by the department”.

However, the “sites” alluded to are not for prospecting per se, they are merely co-ordinates that applicants are obliged to submit to the department to indicate corner points of the area within which they propose to prospect.

The department has confirmed that Chancellor House has been issued with eight prospecting rights out of a total of 17 applications submitted: for coal, uranium, gold and diamonds.