On-The-Air (22/10/2021)

22nd October 2021 By: Martin Creamer - Creamer Media Editor

On-The-Air (22/10/2021)

Every Friday, SAfm’s radio anchor Sakina Kamwendo speaks to Martin Creamer, publishing editor of Engineering News & Mining Weekly. Reported here is this Friday’s At the Coalface transcript:

Kamwendo: The small end of the Johannesburg Stock Exchange (JSE) is in danger of collapsing unless something is done to incentivise it.

Creamer: Yes, in other mining jurisdictions, Canada, Australia, they incentivise people investing in the small explorers, the small mining companies. This we have been pleading for for decades in South Africa and it hasn’t come about. At the same time, there has been a change in the savings pattern.

Savings from pension funds and provident funds are being directed along a single channel to the big companies, you know the Sanlams, Momentums, the Old Mutuals. There are about a dozen of these companies and anyone who invests with them gets a tax free amount off the taxes. There is an incentive to go into these big companies, but the big companies have got very, very strict rules. They fall under the umbrella of an association called the Association of Savings and Investment in South Africa (ASISA) and ASISA has rules that preclude the smaller companies. They have got to go into the bigger companies.

As a result of this there is activity at the top end of the market, the big end of the market, but you see a terrible collapse of the bottom end of the market. We are looking at delistings now numbering 20 this year so far and another 9 delistings possible next year, in fact scheduled for next year. Now, if you look at Australia during this time, because there is a good activity in mining, there have been 63 new listings so far on the Australian Stock Exchange and that just shows you the difference here in mining jurisdictions.

But National Treasury is turning a deaf ear to this for some reason, and you find that even Australian pension funds through secondary listings on the JSE, primary listings in Australia, they are investing in our companies here and doing very well, because at the smaller end you can get a much bigger return. We’ve had some of the returns at 400%, there have been returns at 222% and we need to get a bit of a flowthrough scheme that gives incentive to people who invest in smaller companies on the JSE, and the ANC in fact, is calling for this through its Economic Transformation Committee.

Kamwendo: Shareholders unhappy with a director’s pay level this week and they’ve voted out one of South Africa’s biggest names in international mining

Creamer: Brian Gilbertson has been synonymous with the big mines in South Africa, Gencore, BHP. Now, again it is a complicated situation, because where is Jupiter Mines listed? It is listed in Australia, and they have got a special thing there if you have an AGM and there is dissatisfaction among the shareholders you can bring in what is called a spill meeting.

They had a spill meeting and they charged that there wasn’t proper governance in this Jupiter Mines and that the CEO in particular was earning too much money and Brian Gilbertson as chairperson should have stopped that. Because he didn’t 78% of the people voted this South African mining doyen right off the board. They also looked at the CEO and said you are going too and 70% voted him off as MD and director of Jupiter Mines.

He remains as CEO of Jupiter Mines. And where is Jupiter Mines active? Only in South Africa, and it is so odd that you have a company listed only in Australia, with assets only in South Africa, and this is this complication at the smaller end of the market again. We are having to look at the restructuring of the Jupiter Mines in South Africa, which owns Tshipi Borwa Manganese mine, a very successful mine in the Northern Cape. Involved in that is Saki Macozoma and he welcomed the governance push in Australia, and it looks like he is perhaps working for a big restructuring which we need in South Africa.

Our manganese mines are not producing what they should do, this should be a national patrimony, but we are not really getting the prices that we need to get and it looks like there is going to be a restructuring. I hope it is this time South Africa centric and not Australia centric.

Kamwendo: South Africans need to take drastic and urgent action to eliminate our huge mining applications backlog.

Creamer: It is so important to get these administration issues out the way. As Parliament was told, and they asked the Department of Mineral Resources and Energy what is your backlog, it turned out to be over 5 000 applications for mining rights, prospecting rights, exploration rights that are sitting in there and taking ages to be processed. It is a no brainer.

If you get this exploration and you get prospecting going, it creates jobs, it creates potential wealth. This is what we are looking for here. It gets all sorts of commercial activities going. When questions were put to the department on what sort of success you are having with that backlog, people can’t get enough information to know whether they are doing well or not, but it seems that it is taking ages. One estimate was that if it goes at this pace, it could take 10 years, now that will be a terrible thing for the South African economy.

So, the proposal coming forward now is that the department, if it cannot handle this because of lack of capacity, it should just put tenders out for people to come in and reduce that backlog. We also need a strategy for exploration, that was promised in January this year. We find now from responses that it is in the hands, it seems, of the Cabinet. It should be coming through there.

But that should not hold up the backlog. The backlog should be done anyway and then we should get this new cadastre so that we can come up to speed with Mozambique and Botswana and all of Southern Africa. That will create jobs and wealth. We need to get these backlogs out of the way.

Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.