Smart governments encourage foreign investment – Glasenberg – by Martin Creamer ( – September 3, 2014)

JOHANNESBURG ( – Smart governments encouraged foreign investment and ensured that they did not make it too difficult or impossible for companies to invest, Glencore CEO Ivan Glasenberg said on Wednesday.

Glencore – which employs 42 500 people at its South African operations, 20 300 of them in coal and 22 200 in alloys, and which last year paid $126-million in taxes and royalties and $490-million in wages – is one of the few mining majors that are continuing to invest in South Africa.

Replying to questions at a media briefing on the prospect of coal being declared strategic in South Africa, Glasenberg said that taking into consideration future growth requirements of Eskom, it was questionable whether the State power utility and South Africa would have sufficient funding to develop the number of coal mines required.

“It would be difficult. You need foreign investment coming in. So whether Eskom is going to make coal a strategic mineral or not, we will invest in this country if we believe that we can get the right returns for our shareholders.

“And what do we bring? We bring a load of money. We invest it in new mines, we employ a lot of people, we pay royalties and taxes and the government gets an ongoing, long-term benefit from us.

“Now, if they make the returns not good enough for us, or where we can do better elsewhere with other investments around the world, we’ve got to take our money there,” said the head of the large company that has been catching the eye of investors by outperforming its longer-established peers significantly in recent months.

“But hopefully South Africa will be smart and encourage foreign investment to make sure the investors get the right return, and that goes for the rest of Africa as well,” said the head of the London-, Hong Kong- and now also Johannesburg-listed diversified mining and marketing company, which has an extensive portfolio of multiquality products from South African coal-mining complexes, which produce more than 47-million tons of coal a year, 23-million tons of it last year going to the State electricity company Eskom.

Glencore is also big in ferroalloys and its low-energy Lion II ferrochrome smelter and Tswelopele pelletiser projects have set new benchmarks.

Glencore South Africa coal head Clinton Ephron told journalists that the company had invested between $3-billion and $4-billion new South African coal mines in the last three to four years.

“We’re here, we’re developing mines, we’re developing our prospecting rights and we’ll continue to do that. We’ll do our share to make up the shortfall of coal that is required to meet the Eskom demand in the future,” Ephron said.

Glencore’s marketing arm is performing well and was 27% higher in the six months to June 30, at $1.5-billion, making it a play that is different to the rest of the mining industry, in that marketing shows resilience even when commodity prices are down.

The company is unafraid to go to new frontiers and is in 18 countries in Africa.

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