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State hopes SEP will turn Alexkor around
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2nd July 2002
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With the process to dispose of 51% of the State-owned Alexkor diamond company to a strategic equity partner (SEP) now officially under way, government is optimistic that the ailing diamond-mining company can be turned to profitability once more.

At present, the Government, through the Department of Public Enterprises (DPE), is the holder of the entire issued share capital of Alexkor.

However, this is about to change, with the DPE having resolved to dispose of a 51% shareholding in Alexkor to a SEP with black economic empowerment (BEE) characteristics and to transfer 10% of Alexkor to the local community.

DPE director (financial modelling and risk analysis) Siphiwe Mathobela told Mining Weekly Online that the Alexkor disposal will be conducted in a two-stage competitive bid process, the first being the expression of interest and prequalification stage and the second being the formal bid stage.

“The deadline for the expression of interests will be July 19 and, depending on the number of prequalifications we receive, we anticipate to finalise a binding expression of interest by the end of the month,” he said.

With the DPE hoping to wrap up the sale of Alexkor this financial year, it is estimated that, by March 2003, the DPE would have successfully closed negotiations with the winning bidder.

When this happens, State minerals and metallurgical technology company Mintek, which was requested by Cabinet in May 2001 to take over the management of the mine, will step down as the managing contractor.

BEE will play a crucial role in the selection of the winning bidder.

Although Mathobela was unable to disclose an exact percentage, he did say that BEE would have to be “prominent in both the ownership and the management of Alexkor”.

“In addition, we would look at bidders’ ability to pay the State for the asset and their respective records in the mining industry, he said.

Since the Alexkor bidding process is open to local and international companies, Mathobela added that it is possible that the 51% share could be sold to a joint-venture consortium, consisting of local and foreign parties.

“By putting 51% of Alexkor in private hands, it is hoped that the company will be able to increase its profits, thereby enabling us to deploy more money into job creation opportunities elsewhere in the area,” Mathobela explained.

Located in Alexander Bay in the Northern Cape, the diamond company has both land and sea operations, producing diamonds of about 98% gem quality.

Its mining lease covers most of the coastal and shallow offshore part of the area of Namaqualand from Port Nolloth to Alexander Bay, a distance of about 105 km.

A Standard Corporate Merchant Bank-led consortium will facilitate the transaction.

Others include Nduna (financial advisers), Chuene Kwinana Motsatse & Semane (legal advisers) and SRK Consulting & Marine and Coastal Geoscience (technical advisers).

A briefing session to parties interested in the Alexkor disposal will be held at 10:00 on Friday, July 5, 2002, at the Department of National Treasury, Budget Council Boardroom, 40 Church Square, Pretoria.
Edited by: Zonika Botha

 

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