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Africa Mining

Anglo Will Flourish Under Cutifani Or Be Bought, Bernstein Says – by Firat Kayakiran (Bloomberg News – June 10, 2014)

http://www.businessweek.com/

Anglo American Plc (AAL) will either be successful at reorganizing its platinum business and starting production at the Minas-Rio iron ore mine in Brazil or be acquired, research company Sanford C. Bernstein Ltd. said.

The metals producer is reviewing global assets to shore up earnings after Chief Executive Officer Mark Cutifani took over last year amid cost overruns and delays at Minas-Rio. Cutifani set a goal of improving Anglo’s return on capital employed to at least 15 percent by 2016 from 8 percent in July.

“There is a free option on offer for Anglo,” Paul Gait, a London-based Bernstein analyst, said in a note today. “Either the company outperforms under Mark Cutifani’s leadership, and demonstrates the value of tons in the ground, or it fails to do so and is put out of its misery in fairly short order.”

Anglo, which controls the world’s largest platinum producer, has seen the output disrupted by a strike since January in South Africa. The Association of Mineworkers and Construction Union has called out more than 70,000 miners, including employees at Anglo American Platinum Ltd. Government-led talks yesterday failed to end the impasse.

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UPDATE 2-Minister quits deadlocked S.African platinum strike talks – by Zandi Shabalala (Reuters India – June 9, 2014)

http://in.reuters.com/

PRETORIA, June 9 (Reuters) – Wage talks between South Africa’s AMCU union and major platinum producers were deadlocked on Monday, prompting the mining minister to abandon his mediation role and dashing hopes for an end to a strike that is pushing the economy towards recession.

The five-month strike has halted mines that normally account for 40 percent of global platinum output and has hit wider economic output in Africa’s most advanced economy, driving it into contraction in the first quarter of this year.

The meeting on Monday was crucial as the government had said it would pull out of its mediation role if a deal was not struck then – and, after the talks ended at an impasse, it duly announced that the mining minister would no longer take part in negotiations.

“No agreement was reached today,” Joseph Mathunjwa, president of the Association of Mineworkers and Construction Union (AMCU), told reporters as he left the talks in Pretoria.

“AMCU made many concessions. We actually moved twice to make employers move closer to us,” he said, but added that the union did not compromise its demand for a 12,500 rand ($1,200) a month basic wage, which excludes allowances.

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SA’s mining problem is one that runs deep – by Ray Hartley (Business Day Live- June 8, 2014)

http://www.bdlive.co.za/

THREE-and-a-half kilometres underground, no one can hear you scream, I tell myself as the drills hammer their way through solid rock. I am at the deepest point of Driefontein’s No 5 shaft, west of Johannesburg.

It is a work environment like no other. A rock-drill operator named Whitey is king. His kingdom is a jagged tunnel known as a panel, blasted out of the battleship-grey rock where the gold lies.

The panel’s low roof forces you into a crouch. The inclined floor is covered with loose rock, the detritus of previous advances into the earth. The rockface temperature approaches 60°C, and although mines are required to cool the stopes to about 28°C, humidity approaching 100% causes continuous and heavy perspiration. It is a cramped, claustrophobic space shared by stripped-down workers, rusted drilling machines and rock fragments.

Around Whitey, helmeted mineworkers toil in a strange, slow silence. Some spray-paint red dots on the rockface where holes must be drilled for blasting. Others attach air and water hoses to his rust-brown drilling machine, which has “AK47” as a nickname.

Earplugs seem a pathetic defence against the screaming, grinding and crunching of the drill bit as it fights its way into the rock, and water sprays from the stuttering machine.

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Semiconductors: The Conflict Over Conflict-Free Minerals – by Ian King (Bloomberg News – June 05, 2014)

http://www.businessweek.com/

Like most advanced chips these days, Intel’s (INTC) contain tantalum, gold, tin, and tungsten—elements that can be mined on the cheap in war-torn parts of the Democratic Republic of Congo. Carolyn Duran’s job is to make sure the company doesn’t use so-called conflict minerals.

For the past five years, Duran, Intel’s supply-chain director, has paid for independent audits and led the company’s own audits of metal producers to determine if their ore comes from mines controlled by militias in the DRC, where a decades-long civil war has claimed millions of lives. It’s as tough as it sounds, she says: “Every single member of Intel’s conflict team has felt, at some point, that we’ve hit an insurmountable task.”

By June 2, U.S. companies with products that may contain conflict minerals were supposed to send reports to the Securities and Exchange Commission detailing their efforts to discover whether their metals originated in the DRC. The rule, designed to starve militias in the central African country of revenue by discouraging companies from dealing with them, dates to 2010’s Dodd-Frank Act.

In April a federal appellate court struck down the part of the rule that would have compelled companies to disclose the possible use of DRC-sourced conflict minerals on their websites. But businesses must still prove to the SEC that they’ve performed their due diligence, either by auditing their suppliers or hiring an accredited third party to do so. Besides Intel, Apple (AAPL) and Hewlett-Packard (HPQ), few companies put in the work before the deadline to trace their components from mine to factory.

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Anglo Says Platinum Pay Fight Inevitable on Productivity – by Firat Kayakiran (Bloomberg News – June 6, 2014)

http://www.bloomberg.com/

Anglo American Plc (AAL)’s four-month battle with a labor union at its South African platinum mines was inevitable because the requests by workers are unsustainable, Chief Executive Officer Mark Cutifani said.

“It’s the fight we had to have,” Cutifani said yesterday in a speech in London. “What’s being asked, for us is unsustainable. And at the same time, the productivity in the platinum sector is one tenth the productivity in the Australian mining sector and we are paying one fifth of the wages.”

Anglo controls the world’s largest platinum producer, which has been disrupted by a strike in South Africa since January. The Association of Mineworkers and Construction Union has called more than 70,000 miners out, including employees at Anglo American Platinum Ltd. (AMS)

Union members are on strike over a demand for basic monthly pay excluding benefits for entry-level underground employees to be more than doubled to 12,500 rand ($1,168) by 2017. The producers have said increases of that order would cost too much.

Minister of Mineral Resources Ngoako Ramatlhodi is coordinating talks between the union and Anglo American Platinum, Lonmin Plc (LMI) and Impala Platinum Holdings Ltd. (IMP), which continue in the South African capital, Pretoria, for a third day today.

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China Swaps Gusto for Rigor as It Learns From Africa – by Franz Wild (Bloomberg News – June 3, 2014)

http://www.bloomberg.com/

China’s gung-ho foray into Africa is waning. As trade with the continent surpasses an annual $160 billion, its companies are avoiding risk by taking smaller stakes in projects close to making money.

Cowed by capricious commodity prices, political instability and a string of lost investments, Chinese financiers aren’t as gutsy as when state-owned giants used their heaps of cash to propel the nation’s “Go Out” drive and whip up business abroad 15 years ago.

“There was a lot of enthusiasm and momentum,” said Clement Kwong, whose Beijing-based Long March Capital Ltd. clubbed together with other investors last year to take over a South African gold company. “That momentum is definitely reined in by a new level of risk aversion and caution.”

China surpassed the U.S. as Africa’s largest trading partner in 2009. Trade volumes soared 11-fold in the decade through 2013, according to data from the Geneva-based International Trade Centre. The quest for profit now trumps the wider aim of creating a Chinese footprint abroad.

Smaller private companies are taking the lead from the state-owned giants that prepared the ground. After many African leaders doubled back on the initial fervor for China, the new players are less conspicuous and score quicker returns.

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TWO MINING BEHEMOTHS BATTLE AN ISRAELI BILLIONAIRE – by Patrick Radden Keefe (The New Yorker – June 2, 2014)

http://www.newyorker.com/

One day in November, 2008, two rival groups of mining executives convened for a meeting in a black office tower on the southern tip of Manhattan. They represented two of the largest mining companies in the world: Brazil’s Vale, and its Anglo-Australian competitor, Rio Tinto. Vale was interested in acquiring a stake in one of Rio Tinto’s most prized projects: a mountain range in the tiny west African nation of Guinea, which contained the planet’s richest deposit of untapped iron ore and was known as Simandou.

When they met that day, executives from Rio Tinto acknowledged that their legal claim to Simandou was under threat. In the summer of 2008, the government of Guinea had rescinded its right to develop the concession, and a new player had emerged on the scene: an Israeli billionaire named Beny Steinmetz, who had made his name in the diamond trade and now had designs on Simandou.

The negotiations between Vale and Rio Tinto eventually fell apart, but Rio Tinto’s concerns turned out to be well founded. Guinea granted Steinmetz’s company, B.S.G.R., exploration rights to half of the Simandou deposit. Then, in 2010, B.S.G.R. announced that it was forming a joint venture to develop the ore—with Vale. The leadership at Rio Tinto was incensed: not only had they lost half of their precious asset to Steinmetz but he had then gone into business with their chief competitor, with whom they had only recently been negotiating a joint venture themselves.

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Breaking the bloody links in the smartphone supply chain – by Bryce Druzin (Silicon Valley Business Journal – May 30, 2014)

http://www.bizjournals.com/sanjose/

Blood diamonds. Blood chocolate. Blood smartphones.

Silicon Valley technology companies are racing to comply with new federal rules that require them to disclose efforts to determine if their products contain materials that fund armed groups in the Democratic Republic of Congo.

By June 2, companies whose products use tantalum, tin, tungsten or gold — widely used in semiconductors, mobile phones and other electronics — are required by the Securities Exchange Commission to disclose steps taken to trace the origin of those minerals.

Companies must describe their efforts to determine the country of origin of these minerals, collectively known as “3TG.” If they have a reason to believe their minerals come from Congo or bordering countries, they must try to determine the minerals’ complete chain of custody, including the source mine if possible.

The rule is a result of years of pressure from human rights organizations such as the Enough Project, Amnesty International and Global Witness. They hope that increased transparency will pressure companies to make sure their minerals are not funding violence in Congo, where 5.4 million people have died since 1998 due to conflict-related causes according to an International Rescue Committee report.

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South Africa’s mines minister: from hunter to strike buster – by Zandi Shabalala and Ed Stoddard (Reuters India – May 29, 2014)

http://in.reuters.com/

JOHANNESBURG – (Reuters) – In his spare time, South Africa’s tough new mines minister, Ngoako Ramatlhodi, enjoys stalking game with a rifle in the wild bush of his native Limpopo province.

Hunting season is in full swing but Ramatlhodi has his eye on bigger game: a solution to a crippling platinum strike, the longest in the history of the country’s mines, which threatens to tip Africa’s most advanced economy into recession.

“I am focused on the strike. It’s my breakfast, lunch and supper,” Ramatlhodi told Reuters in an interview. Sworn in on Monday, he has waded straight into the fray, dragging the mining union and platinum firms back to the negotiating table after the latest round of talks collapsed.

Ramatlhodi looks determined to bring an end to the 18-week strike which has hit 40 percent of global production of the precious metal used to make catalytic converters that reduce pollution from automobiles.

“He summoned the parties back and said we are going to talk,” a union source familiar with the matter told Reuters after talks again stalled on Wednesday. Ramatlhodi has set-up a government mediation team which includes treasury officials.

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South Africa Raises Effort to End 18-Week Platinum Strike – by Andre Janse van Vuuren (Bloomberg News – May 28, 2014)

http://www.bloomberg.com/

South Africa’s new mining minister called on the nation’s treasury and labor departments to assist in ending a four-month strike over pay that’s crippled local operations of the world’s three largest platinum producers.

The government team set up by Minister of Mineral Resources Ngoako Ramatlhodi, who took office two days ago, will meet officials from Anglo American Platinum Ltd. (AMS), Impala Platinum Holdings Ltd. (IMP) and Lonmin Plc (LMI) tomorrow as well as representatives from the main union at their operations, his department said in a statement on its website. This follows talks with producers today and the union yesterday.

More than 70,000 members of the Association of Mineworkers and Construction Union have been on a pay strike since Jan. 23. The industry’s longest and costliest stoppage saw its economic contribution drop the most in 47 years in the first quarter, resulting in the first contraction in gross domestic product since a 2009 recession, according to Statistics South Africa.

“All parties are hurting,” Ramatlhodi said in the statement. “We have no option but to find an amicable solution.” The parties will “explore all possibilities for a resolution” tomorrow and “report back by the end of the day on what is possible,” he said.

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Rio, Guinea Agree on Terms for $20 Billion Iron-Ore Mine – by Jesse Riseborough (Bloomberg News – May 27, 2014)

http://www.businessweek.com/

Rio Tinto Group (RIO), the world’s second-biggest mining company, agreed financial terms with the government of Guinea for a potential $20 billion iron-ore mine, port and rail project that may start by the end of this decade.

The accord will underpin talks with new investors for the rail and port component of developing the Simandou resource, Rio and its project partners Aluminum Corp. of China Ltd., International Finance Corp. and the government of Guinea said yesterday in a joint statement. The parties gave no commitment on when production will start.

Simandou is the world’s largest untapped iron-ore resource and Rio has estimated the mine could produce 100 million tons of the steelmaking ingredient a year. The project could double the West African nation’s current gross domestic product and add 45,000 jobs in the country, according to the statement.

The accord doesn’t commit Rio to building the project and analysts have said a legal dispute over the ownership of adjacent ground at Simandou could delay first production into the next decade. The agreement signed yesterday covers two of four mining permits for an ore-rich area in the southeast of Guinea.

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Untested new South Africa mines minister faces baptism of fire – Ed Stoddard (Reuters India – May 26, 2014)

http://in.reuters.com/

JOHANNESBURG, May 26 (Reuters) – South African President Jacob Zuma’s appointment of a new mines minister unfamiliar to the sector but known for his black empowerment views adds uncertainty to prospects for ending a crippling four-month-old platinum strike this is hurting growth.

The stoppage at Anglo American Platinum, Impala Platinum and Lonmin is already the longest in the country’s history and has damaged Africa’s most advanced economy. It is also showing signs of descending into violence. Five miners have been killed in the past two weeks as some seeking to return to work face strike pickets. The latest round of wage negotiations to try to end the dispute, mediated by a labour court judge, has made little headway.

This will mean a baptism of fire for Mines Minister Ngoako Ramatlhodi, a 58-year-old lawyer and former deputy minister in the prison service, who was named as part of Zuma’s new-look cabinet on Sunday.

By contrast, the promotion to finance minister of Nhlanhla Nene, who takes over from the respected Pravin Gordhan, was taken as a sign of continuity in the reshuffle, which follows the ruling African National Congress’s convincing re-election on May 7.

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Tunisian Discontent Reflected in Protests That Have Idled Mines – by Carlotta Gallmay (New York Times – May 13, 2014)

http://www.nytimes.com/

GAFSA, Tunisia — Tunisians often say the first uprising of the Arab Spring began not in 2010 after the self-immolation of a fruit vendor, Mohamed Bouazizi, but in 2008, when protests over corrupt hiring practices at the mines of Gafsa ran on for six months. It is a measure of the lingering challenges of Tunisia’s revolution that people here are still in revolt.

In the towns of Moulares and Redeyef, protests have idled the phosphate mines — a cornerstone of the economy — for much of the last three years. Citizens regularly block roads and burn tires. Police and government officials are barely tolerated.

“We will never stop this strike until we get a job,” said Bashir Mabrouki, 28, in a group of young people who huddled around a brazier while guarding a barricade of rocks and scrap metal that blocked shipments last month. “We are being played by the government and their fake promises.”

The complaints are an enduring refrain even since the overthrow of President Zine el-Abidine Ben Ali in January 2011. They point to what many here see as the unfinished business of their revolution, and a problem endemic across North Africa: the failure to meet the aspirations of a youthful population.

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Empty Buses Show Defiance in S. Africa’s Platinum Strike – by Kevin Crowley (Bloomberg News – May 23, 2014)

http://www.bloomberg.com/

An empty bus that’s supposed to be taking Lonmin Plc (LMI) employees back to work rolled along the dusty main road in Marikana in the heart of South Africa’s platinum belt, where miners have been on strike for four months.

“You can see for yourself,” said Jandri van Rensburg, a 25-year-old platinum miner who was drinking beer outside Survivors Pub in the settlement on a sunny Friday afternoon. “Don’t believe what the mines are saying — people don’t want to go back to work.”

The bus, green with about 30 seats and a Lonmin sign on the side, was one of three empty shuttles that a reporter from Bloomberg News saw on May 16 heading toward Lonmin (LON)’s Wonderkop mine, close to where 34 wage protesters were killed by police in 2012. Mediation talks between the companies and worker representatives in Johannesburg, set down for three days, have been extended into the weekend.

Van Rensburg’s defiance reflects anger and masks fear in the Rustenburg area of the North West province, where as many as 1.6 million people have been affected by the strike at operations owned by Lonmin, Anglo American Platinum Ltd. (AMS) and Impala Platinum Holdings Ltd. (IMP) Five people have been murdered this month, including four miners, while thousands of starving families rely on food aid.

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