South Africa’s diversified resources group Exxaro is disposing of its 50.04 stake in Rosh Pinah Zinc and lead mine in Namibia, barely two months after Anglo American also announced its divesture from Skorpion Zinc mine.
The two adjacent zinc mines are situated in the sprawling semi arid but mineral- rich south western parts of Namibia.
Just like Anglo American, Exxaro said Tuesday that it is quitting the zinc mining and refining business and is putting under the block its portfolio of zinc assets which comprise Zincor Refinery in Gauteng, a 26 percent stake in Black Mountain Mining (Pty) Ltd, which owns Black Mountain zinc and lead mine and Gamsberg zinc project in Northern Cape. Under the hammer is a 22 percent stake in Chifeng zinc smelter in China. The zinc assets make up 2 percent of the group’s net assets and contribute 10 percent of its sales.
Exxaro said the move to dispose of Rosh Pinah and its entire portfolio of zinc assets is meant to cut overheads and prioritise capital expenditure.
“The latest measures provide a balance between our commodity and project portfolios and our long term growth aspirations. Our ongoing review of the business with particular emphasis on cost and balance sheet structures will ensure that we remain optimally positioned to meet all stakeholder expectations,” said Exxaro CEO Sipho Nkosi. “We believe that the cycle of the zinc metal is picking up and that it’s good time to sell. Anglo American, our partner at Black Mountain and our neighbour in Namibia, is also selling its zinc assets, which may be a very good suite of assets if offered for sale together. It remains to be seen whether that will take place, but it’s definitely an option,” Wim de Klerk, Exxaro financial director said.
Trevor Arran, Exxaro’s head of base metals section refused to put a price on Rosh Pinah but told The Southern Times that Rosh Pinah is a good and viable operation adding that Exxaro’s strategy is ‘just a configuration of assets.’
“Rosh Pinah is a good operation and there are good shareholders and our move is not meant to close the operation but just a change of shareholding,” Arran said.
Exxaro in June last whittled its stake in Rosh Pinah to 50.04 percent selling 43.8 percent to Namibia’s black economic empowerment group PE Minerals, which holds the mineral rights for Rosh Pinah and Jaguar Investments, whose shareholders vary from traditional authorities and individuals including employees. The June 2008 deal resulted in PE Minerals holding an 8 percent interest, Jaguar 38.99 percent shareholding and Employee Empowerment Participation Scheme with a 2.97 stake.
It is then expected that PE Minerals should be gunning for the Exxaro stake in the zinc and lead mine.
Arran said that there is still a lot to be done before the deal is finalised and could not say whether PE Minerals is interested in raising its shareholding in the mine. “PE Minerals and Jaguar have been good partners, well on site in terms of strategy and support but whether they will be interested I cannot comment,” Arran said.
Together with Exxaro’s Zincor refinery in South Africa, Rosh Pinah was part of a one of few integrated zinc mining and refinery operations in the world.
Rosh Pinah produces around 100 000 tonnes of zinc annually. Zinc mined at Rosh Pinah is refined at Zincor in South Africa.
Meanwhile Namibia’s black economic empowerment group PE Minerals is gunning for Exxaro’s 50.04 percent stake in Rosh Pinah zinc and lead mine, which the South African diversified group is disposing as it moves away from the zinc mining business.
The Southern Times can authoritatively reveal that PE Minerals, which already owns a 49 percent stake in Namibia’s second largest mine, Rosh Pinah wants the Exxaro stake to cement its grip on the zinc mining asset.
PE Minerals also owns mineral rights to Rosh Pinah.
The JSE listed Exxaro announced Tuesday that it is disposing all its zinc assets including the Namibian operation, Rosh Pinah. PE Minerals automatically opened negotiation channels with Exxaro.
Coen Wium, a senior official at PE Minerals told The Southern Times that as a shareholder in Rosh Pinah PE Minerals has the first right of refusal in a move which is likely to outflank other interested potential buyers.
“By nature of us being shareholders and holding mineral rights, nothing can happen without us having a say...they (Exxaro) must offer the stake to Namibians and we have the first right to either take it or refuse,” Wium said.
He added that negotiations for the Exxaro stake are being carried out in an open and transparent manner. Wium said that as a going concern Rosh Pinah remains a viable operation.
The mine currently has a 7 year life span but Wium said that with ongoing exploration and continued investment into the mine, the lifespan could be extended to more than 20 years.
Wium also said that Rosh Pinah has a good management team adding that any change in shareholding should not necessitate management shakeup.
But Exxaro’s divesture provides the right opportunity for Namibian investors to break into the largely multinationals dominated mining sector.
Most Namibia investors have been shying away from investing in the mining sector which is capital intensive and dominated by multinational corporations.
“This is an outright opportunity for Namibians and I can tell you we have a handle on this development,” Wium said. This is the second mining operation offered for sale in just three months.
Exxaro and Anglo, which both share equity in Black Mountain and Gamsberg zinc mines in South Africa, are pulling out of zinc business in Namibia.
Anglo is selling its wholly owned Skorpion zinc mine, which is adjacent to Rosh Pinah. The two mines share the small mining town of Rosh Pinah and have been pooling resources to develop the town as a separate entity of the mining business. Skorpion has however attracted the attention of Chinese firm Chinmetals of China, which reports said last month could be interested in the state of the art zinc mine and refinery.
The Namibian government through its Epangelo mining group, could also be interested in the stake.
Source: Southern Times
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