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Polity
Article by: Martin Creamer
Published: 22 Feb 2010
Shareholder threatens to quit ARM over Motsepe's nationalisation prevarication
JOHANNESBURG (miningweekly.com) – A shareholder on Monday publicly threatened to divest from diversified miner African Rainbow Minerals (ARM) after its executive chairperson Patrice Motsepe prevaricated on the issue of the nationalisation of South African mines and indigensation in Zimbabwe, where ARM may invest.

After Motsepe arrived 20 minutes late for ARM's presentation of results, the company presented headline earnings of R454-million, which reflected a decline of R1,78-billion on the corresponding period last year, but an increase of R369-million over the headline earnings of the preceding six months.

At question time, Anglo Rand Securities' Louis Venter asked from the floor what Motsepe regarded as being "good" about the nationalisation of South Africa's mines, given that he had said last year that he would support it if it was found to be in the best interests of the country.

"Can you please explain to us what's good about nationalisation?" Venter asked.

After Motsepe spoke in reply for more than 12 minutes, including restating that whatever South Africa decided on the issue of nationalisation or even socialism, he would accept, Venter complained that Motsepe had failed to answer his question.

After more than 17 minutes, a seemingly exasperated Venter said: "I'm taking my shareholders' money out of ARM today, because you don't want to stand up and say that nationalisation is bad."

Venter added that he would be diverting the ARM investment into either BHP Billiton or perhaps even Anglo American in order to benefit from the activities of those diversified majors outside South Africa.

"After today, you won't get a cent of my money," Venter said. He was later seen in further discussion with Motsepe, who had earlier, from the podium, made a point of greeting Zimbabwean ambassador SK Moyo, adding that ARM was contemplating "significant" investments in Zimbabwe.

Of the possible Zimbabwean investment, shareholder Ruby Rosenberg asked from the floor how Motsepe would reconcile Zimbabwe's newly gazetted indigenisation policy of 51% of shares being held by Zimbabweans, because, to him, the Zimbabwean indigenisation policy sounded "very much like a preset policy of nationalisation".

Rosenberg wanted to know how Motsepe intended safeguarding the money of ARM shareholders.

"I would hazard a guess, and I stress it's a guess, that most shareholders would be very much against investing in Zimbabwe, bearing in mind the likelihood of indigenisation," Rosenberg added.

Motsepe replied that "we have to help Zimbabwe to become a globally competitive country that can attract investment and can do well" and said, after further questioning, that ARM was targeting becoming involved in platinum-mining in Zimbabwe.

Motsepe said that there were certain things in Zimbabwe that the company did not like: "I have had a number of very confidential discussions and sometimes I feel perplexed. There are many Zimbabweans who come to South Africa and, in some of the things we are looking at, they will be our partners in their country."

The nationalisation issue arose at the presentation as a result of a remark Motsepe made in an AMLive radio broadcast of the State-owned South African Broadcasting Corporation in December, in which he said that, if the nationalisation of South Africa's mines was good for South Africa, then he was in favour of it.

Motsepe, one of South Africa's foremost black business leaders, made the remark in Limpopo province, the stronghold of African National Congress Youth Leader Julius Malema, who is a vocal advocate of the nationalisation of South Africa's mines. The remark was made against the background of South Africa's Department of Mineral Resources having already formed a State-owned mining company, which is exploring for coal and hoping to begin mining both coal and uranium.

On its results in the six months to December 31, ARM said that the significant decline in commodity prices and the strengthening of the rand against the dollar negatively impacted on its earnings.

The company was able to report increased sales volumes across platinum group metals, nickel, iron-ore, manganese ore, chrome ore and alloys, with unit costs decreasing at platinum, nickel and iron-ore operations.

ARM's financial position remained robust, with a net debt to equity of 8,4%, and the company was continuing to focus on containing costs.

ARM CEO André Wilkens reported that the Khumani iron-ore mine was ramping up to ten-million tons a year and phase 2a of the Nkomati large-scale nickel expansion project had been commissioned, as had the Goedgevonden coalmine.
On the energy front, the company had signed a long-term offtake agreement with Eskom.

In the six months to December 31, the costs for Two Rivers and Modikwa were reduced by 8% and 6% respectively, while the rand-a-ton milled costs at the Nkomati nickel mine decreased by 28%.