Maravi

(MnG) A brave new BEE dawn?

A brave new BEE dawn?
VERASHNI PILLAY | JOHANNESBURG, SOUTH AFRICA - Sep 10 2010 17:28

Cosatu's joint venture with Indian mining parastatal trumpeted as true empowerment

India's largest iron ore producer, the government-owned National Mineral Development Corporation (NMDC), has joined forces with Cosatu's investment arm in a bid to exploit mining opportunities in South Africa, the two companies announced last week.

The deal with Kopano Ke Matla Investment Company, which is fully owned by Cosatu, has been 18 months in the making, Kopano chief executive Collin Matjila told journalists recently.

Indian parastatal NMDC is the eighth-largest producer of alloys in the world, producing about 30-million tonnes of iron ore and employing 6 000 people in India. This is the NMDC's second foray into Africa, following the acquisition of a gold mine in Tanzania in 2006. "This time our target is more coal, iron ore and manganese," NMDC chairperson and managing director Rana Som said.

With a portfolio of just R300-million and no mining experience, Kopano is teaming up with a company that had a 2009-2010 turnover of $1,38-billion. But Kopano -- which exceeds the government's black economic empowerment (BEE) requirements -- will enable NMDC to acquire mining assets in South Africa.

"Since NMDC has mining expertise, it was not necessary for its partner to have mining experience," NMDC's technical director, Narendra Kumar Nanda, told the Mail & Guardian.

The newly inked joint venture is being trumpeted as an alternative model to dubious South African BEE business deals that benefit elites.

The recent controversial R800-million BEE deal between mining giant ArcelorMittal and the politically connected Imperial Crown Trading (ICT) is a case in point. Talks to seal the deal, following the surprise granting of rights to ICT to prospect at the lucrative Sishen iron ore mine, were facilitated by the Guptas -- an Indian family who have increasingly aligned themselves with President Jacob Zuma. ICT is also 50% owned by Jagdish Parekh, a close associate of the Gupta family.

Kopano, on the other hand, is "a broad-based black company wholly owned by Cosatu, representing more than two million members", Matjila told the M&G.

"Kopano is genuinely broad based and is involved in the mining sector as a long-term strategy and not as a short-term opportunist move for quick profit-making," he said.

Whether the presence of labour interests will guarantee broad-based empowerment is yet to be seen. One of ICT's directors, for example, is Archie Luhlabo -- a former mine worker and trade unionist whose work in the Mineworkers' Investment Company led him into increasingly lucrative personal deals.

But Som constantly reiterated the ethical values of his company.

The pillars of NMDC's work, according to Som, are scientific mining -- or mining without wastage through beneficiation and blending -- environmental friendliness and a commitment to benefit communities where mining operations take place.

The company was not scared off by recent industrial action in the country. "Such situations occur in India also," Nanda said, adding that the company had to deal with a robust union culture in India, with strong alliances to both the ruling party and the opposition. "NMDC has been able to come out of this problem through continual dialogue, negotiations and by following a transparent policy."

Indeed, the promises to the company's future workers in South Africa are dazzling. NMDC pays for the education of every worker's child up to a postgraduate degree, offers lifelong medical care to workers and their spouses and provides all workers with family units. "We have finished our wage negotiations [in India] and our workers were awarded a wage increase of 27%, the highest in the country," Som said.

But NMDC acknowledged that the proof of the pudding would be in the eating-- when the two companies settled on a mine -- and said it welcomed journalists monitoring any coming deals. Much has been made of their shared values and the deal is also being punted by some close to the process as an alternative to the ANC Youth League's push for the nationalisation of mines.

But the spectre of nationalisation still looms over the deal. The powerful Cosatu-affiliated National Union of Mineworkers supports "strategic" nationalisation in the very minerals NMDC is targeting. While Kopano's Matjila would not comment, Nanda acknowledged it was an issue "we have to consider".

"We have to get more information about the issues raised and certain commitments from the government could be necessary to avoid the investment risk," he said.

Labels: ARCHIE LUHLABO, BEE, COSATU, INDIA, NUM (SA)

posted by MrK @ 6:05 PM