2005-11-19,+Tribal+Monopoly+Capitalism+plus+Maduna


 * Business Day, Johannesburg, 18 October 2005**

= Making mineral rights work for the people =


 * Charlotte Mathews, Resources Editor**

CLINCHING a business agreement that satisfies all parties is harder than usual when one side is a major platinum corporation and the other is a scattered rural community.

In the platinum-rich Bushveld region near Rustenburg, the inspiring example is how the Royal Bafokeng are reinvesting royalties from Impala Platinum and Anglo Platinum in upliftment projects.

The Bushveld complex in North West accounts for more than 80% of the world’s platinum reserves and 70% of global platinum production. But apart from entertainment complex Sun City and Rustenburg, there is little nonmining development.

One of the first priorities for rural communities that can secure an income from mining rights is to provide basic infrastructure such as tarred roads, electricity, water reticulation, schools and hospitals.

The Royal Bafokeng nation of about 300000 people has 1,5% equity in Implats and earns a 22% royalty from its pretax earnings from the mines. It also has a joint venture with Angloplat at Rasimone and a 32% stake in ferrochrome producer Merafe Resources. Its finance arm is invested in Astrapak, SA Eagle and Fraser Alexander.

The tribe has delivered R2bn in infrastructure, including 574km of tarred roads, 49 schools, six clinics, 530km of water reticulation, sanitation and electricity. It established businesses and joint ventures, including a brickworks, construction and petroleum businesses. It also has a bursary programme and supports small enterprises.

But internal leadership disputes, too-high expectations and lack of capacity and finance can affect other tribes’ ability to negotiate satisfactory business agreements.

Last December it was reported that members of the Bapo Ba Mogale tribe contesting its leadership thought its 2,8% share of Incwala Resources insultingly low, and said the deal was illegal. Incwala holds 18% of Lonmin’s two platinum mines in the Marikana district of North West. Israel Morena, chairman of the Bapo-Ba Mogale council, says they did not think they got a fair deal from Incwala, considering they were told they were a “cornerstone” and would be among the first to get shares. The tribe battled to get its 2,8% and had to pay R12m for it, given as a loan by Lonmin.

The loan fell due earlier this year and the tribe has requested a rollover. Morena says the Bapo-Ba Mogale earned about R18m in royalties from Lonmin in its last financial year, but the money is being used to build schools and roads.

He attributes the Royal Bafokeng’s success to excellent leadership, with a clear goal and strategy. He advises other tribes with mineral rights to get legal advisers and consult the minerals and energy department.

There are other agreements in place between some North West tribes and established companies that are based on exploration, so the extent of participation and finance is not yet an issue.

Afplats, the platinum exploration group listed on London’s AIM market, has a prospecting contract with the Bakwena Ba-Ga Magopa on the Leeuwkop project in the Bushveld complex. Afplats is helping with community projects and recently refurbished a school. It is funding initial exploration and a feasibility study, and once the study is completed, the tribe has the right to take up to 50% of the project.

Afplats CEO Roy Pitchford says the company negotiated a prospecting deal with the Ba Ga Magopa’s king and matters seemed to go smoothly. There were meetings with tribal councils with representatives from various areas. Afplats will also pay about R250000 a year for prospecting rights and access.

If a mine is established, the tribe will make a cash contribution to development. If it cannot afford to do so, Afplats expects to assist it “in some manner still to be decided”.

Placer Dome has a joint venture with the Bakgatla Ba Kgafela at the Sedibelo project. The Bakgatla hold the prospecting licence and Placer Dome can earn 50% by funding exploration up to completion of a feasibility study, or paying a lump sum. Placer Dome contributes to a community development trust and gives jobs and contract preference to members of the community.

Wesizwe, a firm into which the Bakubung tribe injected its assets in return for a 33% stake, is showing a relatively high level of organisation. Another 19% of Wesizwe is owned by black investors. Wesizwe owns mineral rights on the western limb of the Bushveld complex and platinum exploration is under way. The company has set up a community trust and an economic development fund of R10m.

Other Bushveld miners have brought in established empowerment investors. Aquarius Platinum sold 29,5% of its South African operations to the Savannah Resources consortium while Nkwe Platinum has partnered with a consortium headed by Tiego Moseneke.

Barplats recently concluded an empowerment deal with a consortium led by Penuell Maduna.

From: http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A103283