Tuesday, 10 August 2010
News Digest: Africa Mining Comment & Analysis - South Africa
London-listed PGM miner, Lonmin, on 5 August announced that it had been instructed by the South African Department for Mineral Resources (DMR) to immediately cease sales of PGM-associated minerals in South Africa. The instruction was issued after the DMR granted prospecting rights for associated minerals within Lonmin's holdings to a second company - Keysha Investments 220, which is reportedly linked to a former Lonmin director.
Chris Melville, Africa mining consultant with Menas Associates today commented:
"This is the second case in less than six months where the DMR has awarded prospecting rights over an area of an existing mine to largely-unknown third parties. For it to happen once could be an isolated case; for it to happen twice, it looks worryingly like the start of a trend".
"Such decisions by the DMR are only likely to reinforce the concerns of those who regard the MPRDA and the Mining Charter as a retrograde step for security of tenure in South Africa's mining industry".
"Moving to a system based on government licence was always going to expose licence awards to the more uneven discretion of ministers and departments of state. Likewise, the requirement to transfer mining titles into 'new order rights' will always create opportunities for third parties to get their foot in the door".
"The concern going forward is whether such gaps become systematically exploited by vested interests, in a manner we've witnessed in a number of other, less well-institutionalised mining regimes in Africa and elsewhere. This isn't inevitable in the South African context, but we may be at something of a crossroads, both politically and in terms of the evolution of the regulatory environment in South Africa".
According to its media release, Lonmin applied for 'new order rights' over the PGM-associated minerals in late 2009, having formerly mined and marketed associated minerals from its operations as it was entitled to under previous legislation. The company claims it was unable to obtain these rights because a prospecting permit over a small portion of its property had been applied for in March 2009 by Keysha Investments 220. This right was awarded in May 2010. Keysha is reportedly connected to HolGoun, whose CEO is Dr Sivi Gounden, a former Lonmin director, who left the Lonmin board in October 2009.
© 2010 Menas Associates