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Disposal of mining assets suspended

Themba Maseko,
Cape Town, South Africa — MININGREVIEW.COM — 14 August 2009 – The South African cabinet has agreed to a suspension of the disposal of mining assets held by state entities “’ a move that could pave the way to the eventual creation of a state mining company.

Government spokesman Themba Maseko said at a post-cabinet briefing here that the moratorium was intended to provide the minister of mineral resources with adequate time to conduct and finalise an audit of mining interests held directly or indirectly by the state

“This audit will enable the state to decide whether to consolidate, retain or dispose of such interests,” he added. “Any exceptions to this moratorium will require discussions with the minister of mineral resources and final approval from cabinet before finalisation.”

Maseko said it was too early to suggest that the moratorium would lead to the establishment of a national mining company “’ an idea favoured by the ruling ANC, but criticised by mining analysts as unworkable.

“At this particular time there is no decision to set up a state mining company, however the review may actually lead government to set one up,” Maseko said. He explained that a lot of state mineral assets were owned without being registered on a central data base.

According to the 2008 annual report of the government-owned Central Energy Fund group, one of its subsidiaries was the African Exploration Mining and Finance Corporation Limited, whose mandate was to acquire and hold all exploration and mineral rights on behalf of the state while engaging in mining.

It was awarded prospecting rights at three sites, mainly for coal, but also torbanite. The company was also in talks with Botswana to explore for coal in an area with in-situ reserves estimated at 30 billion tonnes, as well as coal bed methane and uranium resources.

African Exploration Mining Corporation was also looking at joint ventures in Zambia and Zimbabwe, to allow it to diversify its portfolio away from coal resources and spread to other commodities,” said the report.

South Africa’s cash-flush Industrial Development Corporation (IDC) also owned a mining subsidiary, Foskor, which last year doubled its profit before tax from R480 million to just over R1 billion rand, and mentioned the possibility of a public offering in 2009.

“We are trying to consolidate all the information with a view to taking decisions on what is the best way of marketing these assets,” Maseko said.