Will S. Africa Buy More Stake in PGM Mines?


". . .there is a chance of big changes in South Africa's mining"

Will South Africa increase its stake in platinum group metals (PGM) industry following a green signal from an advisory body?

A totally black-owned company KIO Advisory Services recently said the country should raise its involvement in the PGM industry in order to achieve transformation.

If that happens, there is a chance of big changes in South Africa's mining sector. Even gold and platinum and other precious metals' prices may also see some changes following this.

The KIO report rejected the view of the South African Communist Party that state ownership in mining is a ploy to bail out black economic empowerment shareholders.

The report echoes the views of controversial ANC Youth League President Julius Malema, who has called for the nationalization of mines, though this has been rejected by President Jacob Zuma.

KIO says transformation taking place in the platinum-producing segment has not been at the holding level but rather at the operations level, thus curtailing the extent and pace of transformation across the sector.

The report is the first in a series that will assess the extent of transformation in South Africa's mining sector. It will focus specifically on black ownership in mining five years after the release of the mining sector charter and promulgation of the Mining and Petroleum Resources Development Act of 2002.

KIO Research Project Manager Lebogang Mokwena said the charter target for 2009 was 15%. But according to her organization's calculations based on gross market capitalization, attributable black ownership amounted to only 7.95%. This would dramatically reduce to 2.79% if Royal Bafokeng's unencumbered equity shareholding of 13.4% in Impala Platinum were to be removed.

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