Johannesburg - Gold will rise to a record high in 2008, increasing for an unprecedented eighth consecutive year, as investors seek protection from accelerating inflation, metals analysts say.
Gold will probably average $800 (about R6 000) an ounce, compared with $696 this year, according to the median estimate of 37 traders, analysts and investors surveyed by Bloomberg News. Gold has gained 30% to $827.20 an ounce in London this year, its best year since 1979, when the Iranian revolution crippled crude-oil exports and US inflation surpassed 13%.
"I do see gold hitting a new high at some point in the first half," said UBS AG's John Reade, who is tied as the most-accurate analyst in the London Bullion Market Association's 2007 gold-price forecast.
Gold rose as record oil prices drove up inflation, and supplies from South Africa, the world's biggest producer, dropped to the lowest in 84 years. Mounting losses in credit markets tied to subprime mortgage loans spurred demand for alternatives to stocks and bonds, while the dollar's drop to a record against a basket of trade-weighted currencies boosted investor interest in commodities.
Gold is the second best-performing metal, after lead, on the UBS Bloomberg Constant Maturity Commodity Index this year. The index of 26 commodities is up 23%. US consumer prices increased 0.8% in November, the most in more than two years. Inflation in the 13-nation euro region accelerated to 3.1% in November, the fastest since 2001, according to Eurostat. Japanese consumer prices rose 0.1% in October, the first gain of 2007.
"The two stories for 2008 are going to be the subprime credit crisis and inflationary issues," said Ross Norman, director of London-based data provider TheBullionDesk.com and a former trader of physical bullion. Gold may climb to "pretty well above $1 000 next year", he said.
Investment demand for gold may easily rise to 500 tons, worth about $13 billion, compared with 384 tons last year, said Philip Klapwijk, chairman of London-based research company GFMS.
'Investor base to widen'
"We see the investor base for gold widening," he said.
"We're still talking small numbers compared to equity flows or other assets."
Assets in the StreetTracks Gold Trust, the world's biggest exchange traded fund backed by gold, rose 39% this year to a record 627.88 metric tons.
Goldman Sachs International economist James Gutman, who is tied with Reade as the LBMA's most accurate forecaster for 2007, said in a December 11 report that gold will drop to $790 in six months and $750 in 12 months.
"As the US dollar gains strength once again, the price of gold will, in turn, likely decline," the report said.
The bank recommended selling December 2008 gold futures.
Prices may reach $1 500, surpassing the all-time high of $850 set in 1980, said GoldMoney.com founder James Turk.
'Demand won't disappear'
"Demand for gold as a safe haven won't disappear, even if the economy picks up," said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Germany-based metals refiner Heraeus Metallhandels.
Stagnating production may buoy prices. Global output fell to a 10-year low of 2 477 tons last year, according to GFMS. Supply from South Africa declined 7.5% to the lowest since 1922 as companies were forced to dig deeper and pay workers more.
Gold "is still a positive story, because of mine supply, which continues to be highly constrained", said Michael Jansen, an analyst at JPMorgan Securities in London.
Prices may gain as much as $100 in 2008, because of production shortages, said Graham Birch, the London-based head of BlackRock's natural resources team that manages $40bn.
"The price needs to be north of $1 000," he said. "$800 is not enough to reverse the gradual decline in production."
The metal may also benefit from continued restrictions on sales by central banks, the biggest holders.
Those sales may slow to 495 tons next year from 583 tons last year, Fortis and VM Group estimated in a report on December 11.
- City Press/Bloomberg
Lithium has been removed due to my involvement in the acquisition of lithium prospects in Africa. Contact Carel van der Merwe at email@example.com or +27 62 538 7750 if interested.
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Nickel Will Fall Most as Metals Retreat in 2008, Survey Shows
By Chanyaporn Chanjaroen
Nickel for immediate delivery will average $29,500 a metric ton next year on the London Metal Exchange, according to the median of 19 analysts surveyed by Bloomberg News this month. The price is 21 percent below this year's average and 46 percent less than the record set in May. Lead will be the best performer for a second year, with a 4 percent gain, the survey showed.
Industrial metals are falling for the first time since 2001 as the deteriorating U.S. housing market curbs demand for copper, zinc and tin. Copper inventories increased 8.5 percent this year and are four times higher than at the end of 2004, LME data show.
``The U.S. housing market won't turn around until the first quarter of 2009, and that will be difficult for base metals,'' said Bill O'Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. O'Neill gave the most accurate forecast for nickel this year among 28 analysts surveyed by Bloomberg.
The five-year rally generated record profits for Melbourne- based BHP Billiton Ltd. and Rio Tinto Group, based in London. The gains also prompted $156.4 billion of mergers among mining companies this year.
Nickel is the second-worst performer among the six metals traded on the LME, falling 21 percent to $26,450 a metric ton. Zinc fell the most, losing 43 percent to $2,425 a ton.
LME-monitored stockpiles of nickel, mostly used in stainless steel, surged almost sixfold this year. The slump in prices prompted steelmakers including Dusseldorf-based ThyssenKrupp AG to write down the value of inventories.
Lower prices failed to curb supply. Production will probably exceed demand by 100,000 tons next year, according to Alan Heap, director of commodity analysis at Citigroup Inc. in Sydney. That's more than twice the metal held in warehouses monitored by the LME.
Heap expects nickel to average $22,046 a ton next year, the lowest forecast among the analysts surveyed.
Not everyone is as pessimistic.
``We've seen the worst in nickel,'' said Jon Bergtheil, head of global metals strategy at JPMorgan Securities Ltd. in London. He estimates miners will produce 16,000 tons more than consumers require in 2008, compared with 25,000 tons this year, because Chinese demand will jump 23 percent, compensating for slower growth in the U.S., Japan and Europe.
Copper for immediate delivery will fall 2.3 percent to an average $6,975 a ton next year, based on the median estimate in the survey.
The combination of limited supply growth and labor strikes may send prices as high as $12,000 a ton, said Jeremy Gray, an analyst at Credit Suisse Group in London. Gray said in January copper would average $7,164 this year, $22 more than the actual average. Benchmark three-month copper reached a record $8,800 in May.
Mines will expand no more than 2.3 percent next year, Gray said. An increase of 1.5 percent would fall short of demand, he said.
Supplies from Codelco, the world's largest copper producer, dropped in the first nine months because of a strike and aging facilities. Workers at Grupo Mexico SA, the country's largest copper miner, have been on strike for four months.
Aluminum Copper Lead Nickel Tin Zinc
ABARE $2,365 $7,100 N/A $27,500 N/A $1,780
ABN Amro $2,315 $6,944 $2,315 $26,455 $14,330 $2,425
ANZ $2,590 $7,165 $3,152 $30,820 N/A $2,740
Barclays $2,838 $7,800 $2,200 $29,875 $15,050 $2,800
BNP $2,545 $6,940 $2,450 $27,750 $18,125 $2,375
Citigroup $2,646 $7,716 $3,042 $22,046 $11,023 $2,756
Commerzbank $2,900 $6,400 $2,800 $24,000 $15,000 $2,600
CPM $2,680 $6,875 $2,340 $30,275 $15,000 $2,510
Suisse $2,535 $6,614 N/A $33,069 N/A $2,646
Bank $2,800 $7,330 $2,260 $32,794 $12,208 $2,921
EIU $2,665 $7,253 $2,697 $29,983 $14,109 $2,729
Sachs $2,488 $7,500 $2,969 $25,250 N/A $2,413
JPMorgan $2,315 $6,950 $2,700 $29,000 $12,375 $2,900
Advisors N/A $6,637 N/A $29,500 N/A N/A
Lynch $2,588 $6,800 $3,073 $36,875 N/A $3,125
RBC $2,425 $6,614 $2,205 $30,864 N/A/ $2,576
Bernstein $2,455 $6,600 $2,575 $23,500 N/A $2,575
UBS $3,086 $7,165 $2,866 $29,211 $10,858 $3,307
Unicredit $2,800 $7,000 N/A N/A N/A N/A
Westpac $2,750 $7,900 $2,700 $31,375 N/A $2,850
Median $2,590 $6,975 $2,698 $29,500 $14,665 $2,735
Average* $2,642 $7,142 $2,594 $37,177 $14,478 $3,264
Change -2% -2.3% 4% -21% 1.3% -16%
* Year-to-date average through Dec. 27, 2007.
To contact the reporter on this story: Chanyaporn Chanjaroen in London atLast Updated: December 30, 2007 19:18 EST
Posted by Carel van der Merwe at 31.12.07
|Global zinc prices are forecast to drop by 45 pct next year|
|General News - 2007 December 31|
Global zinc prices are forecast to drop by 45 per cent next year and average around USD1,780 a ton. The projection, made by Australia’s independent government economic research agency Abare, has been made on the expectations that new supply will come on line and stocks will recover as production exceeds consumption.
Stocks are expected to rise from an equivalent of 2.1 weeks of consumption at the end of 2007 to around 3.1 weeks by the end of next year. “There is some upside risk to the price assessment, however, in that new industry standards in China have the potential to reduce production of refined zinc, and result in a smaller rise in the end of year stocks,” Abare said in its outlook.
This year, substitution of galvanised steel, which is zinc coated, for stainless steel that contains nickel– whose price zoomed to a record this year– led to increased consumption of Zinc. Besides, demand for galvanised steel and zinc-based alloys remained strong.
“Growth in vehicle production in China and India is expected to remain strong, resulting in increased demand for galvanised steel sheet used in the bodies of cars and trucks (in 2008). In the US, rising demand for galvanised steel in non-housing construction is expected to offset lower demand from residential construction associated with the downturn in the housing market,” Abare said.
Mines, which had previously been closed, had also resumed operations. Production has increased in China also, though the month-to-month output has varied. For this year, zinc mine production is estimated to be 11.2 mt, up seven per cent over last year. In 2008, production is forecast to increase by another 3 per cent to 11.6 mt.
“A number of new mines are expected to commence production during the year, including Satkamo in Finland, which has a capacity of 60,000 tons a year, and Penasquito in Mexico with a capacity of 1.35-lakh tons.
Refined zinc production is estimated to be 11.2 mt this year, up five per cent over last year. Next year, it is projected to rise five per cent to 11.8 mt.
“A risk to refined zinc production forecasts for 2008 is China’s efforts to prevent over-investment in power, resources and pollution intensive industries. China’s National Development and Reform Commission has set out a number of entrance standards aimed at improving the performance of its domestic lead and zinc industries and has asked the provincial governments to phase out lead and zinc facilities that do not meet the benchmarks,” Abare said.
Zinc price, which had run to a record USD4,260 a ton earlier this year, was quoted at USD2,440 during the weekend.
Posted by Carel van der Merwe at 31.12.07
HISTORY OF THE NIGERIAN PETROLEUM INDUSTRY
Oil was discovered in Nigeria in 1956 at Oloibiri in the Niger Delta after half a century of exploration. The discovery was made by Shell-BP, at the time the sole concessionaire. Nigeria joined the ranks of oil producers in 1958 when its first oil field came on stream producing 5,100 bpd. After 1960, exploration rights in onshore and offshore areas adjoining the Niger Delta were extended to other foreign companies. In 1965 the EA field was discovered by Shell in shallow water southeast of Warri.
In 1970, the end of the Biafran war coincided with the rise in the world oil price, and Nigeria was able to reap instant riches from its oil production. Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC) in 1971 and established the Nigerian National Petroleum Company (NNPC) in 1977, a state owned and controlled company which is a major player in both the upstream and downstream sectors.
Following the discovery of crude oil by Shell D’Arcy Petroleum, pioneer production began in 1958 from the company’s oil field in Oloibiri in the Eastern Niger Delta. By the late sixties and early seventies, Nigeria had attained a production level of over 2 million barrels of crude oil a day. Although production figures dropped in the eighties due to economic slump, 2004 saw a total rejuvenation of oil production to a record level of 2.5 million barrels per day. Current development strategies are aimed at increasing production to 4million barrels per day by the year 2010.
Petroleum production and export play a dominant role in Nigeria's economy and account for about 90% of her gross earnings. This dominant role has pushed agriculture, the traditional mainstay of the economy, from the early fifties and sixties, to the background.
Major Events in the history of the Nigerian Oil and Gas
Nigerian Bitumen Co. & British Colonial Petroleum commenced operations around Okitipupa.
Shell D' Arcy granted Exploration license to prospect for oil throughout Nigeria.
Mobil Oil Corporation started operations in Nigeria.
First successful well drilled at Oloibiri by Shell D'Arcy
Changed name to Shell-BP Petroleum Development Company of Nigeria Limited.
First shipment of oil from Nigeria.
Shell's Bonny Terminal was commissioned.
Texaco Overseas started operations in Nigeria.
Elf started operations in Nigeria. (As Safrap)
Nigeria Agip Oil Company started operations in Nigeria
Elf discovered Obagi field and Ubata gas field
Gulf's first production
Agip found its first oil at Ebocha
Phillips Oil Company started operations in Bendel State
Elf started production in Rivers State with 12,000 b/d
Phillips drilled its first well (Dry) at Osari –I
Phillips first oil discovery at Gilli-Gilli -I
Mobil Producing Nigeria Limited) was formed.
Gulf's Terminal at Escravos was commissioned
Mobil started production from 4 wells at Idoho Field
Agip started production
Department of Petroleum Resources Inspectorate started.
Shell's Forcados Terminal Commissioned
Mobil's terminal at Qua Iboe commissioned
First Participation Agreement; Federal Government acquires 35% shares in the Oil Companies
Ashland started PSC with then NNOC (NNPC)
Pan Ocean Corporation drilled its first discovery well at Ogharefe –I
Second Participation Agreement, Federal Government increases equity to 55%.
Elf formally changed its name from "Safrap"
Ashland's first oil discovery at Ossu –I
First Oil lifting from Brass Terminal by Agip
DPR upgraded to Ministry of Petroleum Resources
MPE renamed Ministry of Petroleum Resources (MPR)
Pan Ocean commenced production via Shell-BP's pipeline at a rate of 10,800 b/d
Government established Nigerian National Petroleum Corporation (NNPC) by Decree 33, (NNOC & MPR extinguished).
Third Participation Agreement (throughout NNPC) increases equity to 60%
Fourth Participation Agreement; BP's shareholding nationalised, leaving NNPC with 80% equity and Shell 20% in the joint Venture.
Changed name to Shell Petroleum Development Company of Nigeria (SPDC)
Agreement consolidating NNPC/Shel1 joint Venture.
Signing of Memorandum of Understanding (MOU)
Fifth Participation Agreement; (NNPC=60%, Shell = 30%, Elf=5%, Agip=5%).
Signing of Memorandum of Understanding & joint Venture Operating Agreement (JOA)
Production Sharing Contracts signed -SNEPCO
Sixth Participation Agreement; (NNPC=55%, Shell=30%, Elf= 10%, Agip=5%).
The coming on-stream of Elf's Odudu blend, offshore OML 100.
SNEPCO starts drilling first Exploration well.
NLNG's Final Investment Decision taken
NLNG's First shipment of Gas out of Bonny Terminal.
NPDC/NAOC Service Contract signed
Production of Okono offshore field.
New PSCs agreement signed.
Liberalisation of the downstream oil sector.
NNPC commences retail outlet scheme
Posted by Carel van der Merwe at 29.12.07
Zimbabwe has published its draft bill on transferring majority ownership of foreign-owned mining companies to locals, including a free 25 percent stake to the government.
Posted: Monday , 19 Nov 2007
HARARE (Reuters) -
President Robert Mugabe's government published a draft bill on Monday forcing mining firms to transfer majority shareholdings to local owners, including giving the Zimbabwe government a free 25 percent stake.
The mines and minerals amendment bill is expected to be presented to parliament and to be approved before the end of the year, and follows the passing in September of a general bill giving 51 percent stakes in foreign-owned firms to locals.
That bill did not include a provision for a 25 percent government shareholding.
Analysts say the latest drive by Mugabe's government is likely to worsen an economic crisis that has left the southern African state with the highest inflation rate in the world at nearly 8,000 percent, and discourage foreign investment. The world's second biggest platinum producer, Impala Platinum (Implats), is the foreign mining firm with the most operations in Zimbabwe, while Rio Tinto has diamond interests and the world's top platinum producer Anglo Platinum (Angloplat) is developing a mine in the country.
South Africa's Implats has said it already had agreements in place that it expected would meet the requirements of the general bill that seeks to grant majority ownership to locals, and that, in principle, it supported the aims of localisation.
"We have not seen the latest documentation and will not be in a position to comment further until we see it," Implats' Chief Executive Officer David Brown told Reuters.
Angloplat's spokesman was not available for comment.
Zimbabwe Chamber of Mines Chief Executive Officer Douglas Verden also said he had not yet seen the new bill: "This is not an issue I can comment on now, I'm yet to study the bill."
But the chamber's chief economist David Matyanga last month said the proposed localisation of mine ownership would scare away much-needed foreign investment and hit production in a sector that is now the country's leading foreign currency earner.
Matyanga said Zimbabwe already had significant local involvement in the mining industry and risked losing further ground to other countries on the continent with friendlier investment policies.
"Of the 22 mining companies in the country, 10 are foreign owned, three are run by government, two are wholly indigenous owned, four listed on the Zimbabwe Stock Exchange and another two owned by local, third or fourth generation white Zimbabweans," Matyanga said.
He said one of the 22 firms had an ownership dispute.
Zimbabwe is grappling with a severe economic crisis blamed on Mugabe's controversial policies, such as the seizure of white-owned farms to resettle landless blacks.
The veteran ruler, in power since independence from Britain in 1980, denies mismanaging the economy and says it has been sabotaged by foreign firms and western nations plotting to undermine his rule.
(Additional Reporting by James Macharia in Johannesburg; Editing by Chris Johnson)
Africa: a continent of contrasts
David McKay (MiningMx)
Posted: Thu, 20 Dec 2007
[miningmx.com] -- NEWS in October that Industrial & Commercial Bank of China Limited (ICBC), China’s biggest bank by market capitalisation, wanted to establish a $1bn fund for investment in African resources is just the tip of the iceberg.
Speaking a month earlier, Dawie Roodt, an economist at the Efficient Group, said the government of China could pump as much as $250bn of a projected trade surplus into Africa.
Incredible? Well, data showed in 2007 that the investment in Africa is beginning to blossom. Miningmx reported in September on United Nations figures that showed foreign direct investment (FDI) in Africa grew 20% to $36bn in 2006 from 2005. The interest in resources is partly because it’s cheaper for China to source its own raw materials than buy it from third parties who might seek a much higher margin.
Yet for all the advantages of investing in African resources, there are demerits. In fact, Africa proved itself a potentially perilous place to invest in 2007. Two test cases, the Democratic Republic of Congo and Zimbabwe, highlight that the risk part of the risk/reward equation is very high.
A string of companies including Brinkley Mining (uranium explorer), Metorex (copper/cobalt miner), Africo (base metals explorer), Camec (base metals), First Quantum Minerals (base metals), Moto Goldmines (gold), AngloGold Ashanti (gold) and Exxaro Resources (diversified) stubbed their proverbial toes against the rock of Congo bureaucracy in 2007.
In nearly all cases, the Congo government questioned the probity of the mining licenses/transactions/deals from which companies justified their right to explore or dig for metals in the country. Eventually, the government unveiled plans to audit all mining licenses granted in the country.
In early November, a report by the Congo’s mining commission, leaked to Bloomberg News and Reuters, said 61 mining contracts should be cancelled or renegotiated. Thirty-seven contracts, including those with international firms Freeport McMoRan Copper & Gold, BHP Billiton and Nikanor, needed renegotiating while the remaining 24 should be terminated, the document recommended.
In the wake of an investor outcry, the Congo government hastened to explain the mining commission did not have executive powers and could only make recommendations. But mining companies have reason to be fearful. Already Exxaro Resources and First Quantum Minerals lost the right to develop the Kipushi zinc mine; Exxaro similarly lost the right to develop Kamoto, a copper mine now owned by Katanga Mining.
The Congo successfully completed its democratic elections in 2007, with relatively little civic disorder, but the results of the country’s mining license review – which could unhinge investor confidence - will be watched closely.
At least the Congo has a strategic plan which it appears to be following. Contracts negotiated in terms of the review may actually call for mining firms to provide better social investment in the country.
In Zimbabwe, however, there’s neither rhyme nor reason to that government’s many diktats the last of which is so-called ‘localisation’ legislation which effectively threatens to seize control of the assets of foreign-owned mining companies.
While the planned legislation requires presidential signoff, Zimbabwe’s chamber of mines is trying to figure out the implications. For Impala Platinum, which has about a third of total resources sown up in Zimbabwe’s future, there are questions whether it’s existing empowerment efforts are enough to comply with the localisation bill.
Impala has already ‘sold back’ resources to the Zimbabwe government and concluded local investment to qualify it for an estimated 30% to 40% empowerment. It’s not known whether these previous agreements exclude it from having to meet the 50% threshold demand by the new localisation bill.
Meanwhile, power constraints, runaway inflation, and the inability to earn a decent price, especially for previous metals also continues to dog Zimbabwe. The country has recently signed an agreement to import power from Mozambique’s Zesa, but the future of the country rests squarely on the ageing and increasingly unpredictable Robert Mugabe.
Plans were hatched in February, mainly by the Congo mining utilities such as Miba (diamond board), to consider listing. Endiama, the Angolan state-owned diamond firm, also raised the possibility of going public. Though nothing has come of the proposals, the fact African governments are considering such ideas is recognition they are not deriving enough value from the commodity bull market.
African governments have recognised that mineral properties they sell to foreign-owned mining companies derive a higher value when listed offshore. That’s another reason why African governments are seeking to derive higher royalties from foreign miners. In February, the Zambian government announced plans to increase royalties payable by miners to 3% from the current 0.6%.
In South African, the government furthered plans to impose royalties from 2009. The third draft of the so-called royalty bill, delivered in December, acknowledges a need to reduce or remove royalties for struggling miners. It has also lowered the royalty payable by diamond producers.
Kumba sues Senegal for $667m
Dec 27 2007 02:51 PM
Johannesburg - Mining giant Anglo American's Kumba Iron Ore is suing the Senegalese government for US$667m, or as much as R4.7bn, after tearing up an iron ore extraction contract, Dow Jones Business News reported on Wednesday.
Kumba is accusing Senegalese authorities of "culpable behavior" after its contract to explore the resources with a view to creating and operating an export-orientated iron ore mine at Falémé was severed in favour of an agreement with the world's largest steel maker ArcelorMittal in February this year.
Quoting the firm's lawyer Boucounta Diallo, the report said the warring parties had agreed to submit their dispute to the International Court of Arbitration.
Kumba accuses the West African country of "breaking the contract in ... an unorthodox fashion" since it had already started exploration when it was ordered to withdraw from the Falémé area, in the southeastern region of Senegal.
Senegal's state-owned development company Miferso, which owns the exploration rights to the Falémé iron ore resources, and Kumba concluded an agreement to explore and develop the resources in July 2004.
Kumba planned to spend an estimated US$2bn on the project, including the development of a 20m tons-a-year mine, installation of 340km of rail and the refurbishment of another 400km of rail as well as the development of port export facilities at Dakar.
In terms of the 2004 agreement, Kumba was given the right to conduct a pre-feasibility study and an option to acquire an 80% interest in the project from Miferso before embarking on a bankable feasibility study.
The option to acquire an 80% interest in the project was exercised in November 2005 but following receipt of notice of such exercise, the government of Senegal and Miferso informed Kumba that they disputed the validity of such a right.
Exploration of the 750m ton resource has now been delayed for two years after negotiations over an amicable solution were stopped short by an ArcelorMittal announcement that it had concluded an agreement with Senegal.
ArcelorMittal is investing around US$2.2bn into what is the largest ever industrial project in Senegal and aims to extract 25m tons of iron ore from 2011.
The steel giant also agreed to pay the Senegalese government a five percent royalty on iron ore from the Falémé mine despite Senegal's mining code dictating a royalty of only three percent.
Senegal has argued that it was within its rights to rescind the contract for extracting iron ore in the Falémé because Kumba missed certain deadlines.
Kumba is 64% owned by Anglo American and produces 32m tonnes of iron ore a year from its principal operating assets at Sishen and Thabazimbi in SA.
The company intended to more than double its current capacity to 70m tonnes by 2015 by exploiting the full potential of the Northern Cape iron ore resources under its control and other opportunities, including those in West Africa.
Falémé alone had the potential to take Kumba's production to around 80m tonnes per annum.
ArcelorMittal has in the meantime indicated that it plans to push ahead with the iron ore project after the Senegalese government officially handed over the concessions in July.
It is ironic that Kumba and the SA arm of ArcelorMittal were both born out of the unbundling of Iscor, the largest SA steel producer, in 2001.
As a result of Mittal's buyout of Iscor, it still benefits from a supply agreement with Kumba where it is entitled to buy between eight and nine million tons of iron ore a year from at cost plus three percent.
This agreement still stands today.
At 13:50 Kumba's shares were trading 50c lower at R299.50 and ArcelorMittal's shares were one rand firmer at R141 on the JSE.
- I-Net Bridge
Mining mogul Rautenbach to develop Zim's third largest platinum mine (Source: Mineweb)
African mining mogul Billy Rautenbach has a growing interest in Zimbabwe through proposed development of the nation’s third largest platinum mine, as well as the Hwange coal exploration venture.
Author: Tawanda Karombo, Mineweb
Posted: Tuesday , 09 Oct 2007
Controversial mining magnate and African investment mogul, Billy Rautenbach, is reported to have clinched a deal to develop a platinum mining project in Zimbabwe's Great Dyke region.
Sources close to the mining mogul confirmed that "should the deal materialize, it will become Zimbabwe's third largest platinum mine" after Zimplats and Mimosa.
Early indications are that Rautenbach - who counts Zimbabwe's President Robert Mugabe among his best friends - is understood to be negotiating a potential joint venture deal with a consortium of local businessmen who could control 30 percent of the investment.
The Zimbabwe Guardian reports that Rautenbach--who is a majority shareholder in the Democratic Republic of Congo's (DRC) state-owned Gecamines and also the Central African Mining and Exploration Company (CAMEC)--will pursue the project through Gecamines.
Sources told Mineweb that Gecamines, which has over the past few months increased its visibility in Zimbabwe, has always had an interest in entering the nation's mining sector. Although the deal is still under negotiation, Rautenbach is also courting a joint venture with local businessmen pursuant to the deal, possibly allowing locals to assume 30 percent control of the project.
A few weeks ago, Rautenbach struck a coal exploration deal with the beleaguered and underperforming Hwange Colliery Company, which signaled the mining magnate's arrival onto Zimbabwe's mining scene.
"Locals have been lined up to up 30 percent shareholding in the platinum mine," confirmed a source close to the developments. "The mine could be developed in Dyke Region, which is estimated to hold the largest platinum deposits the country."
The Zimbabwe Guardian reports that Rautenbach "met high-ranking government officials in August to discuss the deal". It is believed that it was during this meeting that the deal was given the nod, but finer details of the meeting nor of the deal still can not be obtained.
Barring the Zimbabwe government's resilient intentions - which were slammed by the country's central bank governor's push through Parliament legislation that would require all foreign-owned mining companies to cede 51 percent of their shareholding to locals - the country's mining sector has shown prospects of growth over the past two years.
Rautenbach's intent to develop the platinum project comes at a time when Implats-owned Zimplats has commissioned a US$258 million underground mine under phase one of the company's long-term expansion programme.
The Mining Amendments Bill and the Black Empowerment Bill, now before Parliament, require that locals hold 51 percent and 50 percent shareholdings in every project involving foreign investment.
Analysts and observers have marveled at the entry of Gecamines into the country's platinum mining sector at 70 percent shareholding. They say this development raises eyebrows since the new legislation restrict s foreign shareholding of companies to just 49 percent.
Zimbabwe: Gold Mines Close Shop
Zimbabwe Independent (Harare)
April 20, 2007
All gold mines this week stopped processing gold due to an acute shortage of foreign currency needed to import cyanide, a key chemical in bullion production. Miners said the Reserve Bank of Zimbabwe had failed to pay them gold delivered since October last year.
Almost all major mines have closed their production mills because they have run out of foreign currency to import essential chemicals. By Wednesday Isabella Mine, Muriel Mine, Forbes & Thompson and the Canadian-owned Blanket Mine had shut down their plants while underground mining had also been reduced by more than half.
Metallon Gold Zimbabwe, the producer of half of Zimbabwe's gold, had by yesterday shut down its plants due to lack of cyanide. Metallon owns five mines, namely Arcturus Mine in Goromonzi, Mazoe Mine in Mazowe, Shamva Mine, How Mine in Bulawayo and Redwing mine in Mutare.
Group chief executive Collen Gura confirmed that all the five mines under Metallon had stopped processing gold.
"I can confirm that our five mines have stopped processing gold due to lack of foreign currency to import cyanide. We have not been paid by the Reserve Bank," said Gura.
Metallon, which employs 5 000 workers, has also sent its contract workers home due to the crisis.
"It's not a protest sign but there is nothing we can do because we just don't have the foreign currency required to get the key chemicals. Our suppliers are saying they need cash," Gura said.
In his Independence Day address on Wednesday President Mugabe lashed out at the rampant smuggling of precious metals such as gold which, he claimed, was resulting in forex losses.
Gold mines are supposed to receive 67% of their gold sales in foreign currency while the remainder is paid in Zimbabwe dollars at a price of $16 000 a gramme. However, since October they have not received either the foreign or local currency component for gold delivered to the central bank. The regulations state that miners are supposed to be paid half their monies within four days and the remainder within 21 days of gold deliveries.
It is estimated that gold mines are owed US$15 million by the central bank. The crisis is already reflecting in total gold production figures.
Latest figures show that Fidelity Printers and Refiners received less than 700kg of gold in March. It is estimated that deliveries for April could be as low as 500kg.
Gold miners say their efforts to engage the central bank have not been fruitful. Urgent sectoral meetings have been held and SOSs sent to the central bank and government but no action has been taken.
At one such meeting on April 11, mining companies told the Ministry of Mines and Mining Development that they could not continue operating under the current situation.
The Zimbabwe Chamber of Mines told the ministry that some of them were already sinking in debt.
"The gold sector over the past few months has been surviving on available stocks and borrowings, which for some companies is in excess of $1 billion a month," said minutes of the meeting.
The chamber said some of its members were surviving on "lines of credit and leveraging on existing relations with fellow mines and suppliers".
"Existing stocks have run out, suppliers are now insisting on cash upfront before goods are delivered, even some banks are no longer willing to continue to offer loans to gold producers who are not servicing their debts." Gold mines want the support price of gold to be reviewed to about $450 000 per gramme. Central bank governor Gideon Gono could not be reached for comment but is expected to make an announcement on the issue in an interim monetary policy statement scheduled for the end of this month.
Zim gold output hits 90-year low
Gold production in Zimbabwe plunged to its lowest in 90 years, the independent Chamber of Mines said Tuesday.
Zimbabwe was also the only mineral-producing country in the world that failed to benefit from high global metal and minerals prices, said Jack Murehwa, head of the chamber, an umbrella group for the country's private and state mining operations.
"Our industry continues to experience declines in volumes ... despite the very buoyant mineral prices which prevailed for the past 18 months," he said in report available Tuesday.
In the year up to March, Zimbabwe produced eight (8) metric tons (just under nine short tons) of gold. In 1916, at the height of the colonial-era gold boom in southern Africa, the former British colony mined 29 metric tons (about 32 short tons) of gold.
Murehwa said the world price for gold rose from about $275 an ounce in 2001 to more than $600 last year. Nickel, platinum and copper prices also soared.
"What excuse can our industry give for not benefiting from this worldwide boom in metal prices?" he said.
The answer, he said, lay in what he called "policy inconsistencies" in the economy that led to hyperinflation, acute shortages of gasoline and hard currency for equipment and spare parts, regular power outages and an exodus of skilled mining personnel to better paid jobs in other countries.
Mining investors staying away
He said despite the high world prices, investors in mining stayed away from Zimbabwe.
Zimbabwe is suffering its worst economic crisis since independence in 1980, blamed largely on corruption, mismanagement and disruptions in the agriculture-based economy after President Robert Mugabe ordered the often-violent seizures of thousands of white-owned commercial farms in 2000 for handing over to black farmers.
Since then, mechanised farming in some areas has been replaced by age-old animal drawn plowing.
Inflation is a record 3 714%, the highest in the world. Last month, consumer prices for most goods doubled in a country already facing shortages of food, gasoline, medicines and other imports.
According to the central bank, overall foreign investment declined from $444.3m in 1998 to just $50m last year. It cited "perceived risk" and worries over security of ownership as the main disincentives for investors.
Mugabe has regularly vowed the government will take a bigger stake in mining in its efforts to turn over more economic production to "indigenous" Zimbabwean interests.
River Ranch said in February, 2007, the shareholders were two external companies, Cornerstone and Sedna. "Mr A Aujan, through his nominees, now owns the shares of Cornerstone and Sedna. In 1999, when River Ranch was in voluntary liquidation, the Farquhars approached his representative in Harare and asked if he would buy the shares of Cornerstone and Sedna. "They said that when they acquired the money, they would repay him and, in return he would be given 25% of the shares in each of the two companies and 25% of the shares in Bubye Minerals (Pvt) Ltd. Mr Aujan agreed and he purchased the shares of the two companies." River Ranch said instead of repaying Mr Aujan what he had paid for the shares: "The Farquhars then approached him on seven occasions seeking loans. Their borrowings totalled approximately US$1.5million. As a result of the loans, his stake in the three companies was to be increased to 30%. "By 2004 the Farquhars had not offered to repay Mr Aujan what he had paid for the shares and they had defaulted in the agreements they had entered into with regard to the money they had borrowed from his companies."River Ranch said at that point Aujan realised that the Farquhars were not going to repay him. He then injected about US$2,5 million, arguing the only way he could recover his investment was for the mine to be resuscitated so that diamonds could be mined. He then terminated their management agreement in 2004 and River Ranch resumed occupation of the mine. Twenty percent of the shares in River Ranch have been acquired by Kupikile Resources, the local indigenous investor with Mujuru and Tirivanhu Mudariki as the shareholders.
Zimbabwe to Nationalize Diamond Mining After Gem Rush
Bloomberg, February 21, 2007
By Brian Latham
Feb. 21 (Bloomberg) -- Zimbabwe's President Robert Mugabe, whose seizure of white-owned farms seven years ago devastated the economy, said he plans to take control of the nation's diamond mines.
The government will take control of the industry after allegations of smuggling from the country's mines and a diamond rush in the eastern district of Marange, Mugabe said in an interview on state television late yesterday. Zimbabwe has two diamond mines known as Murowa, owned by Rio Tinto Plc, the world's third-biggest mining company, and RioZim Ltd. The second, River Ranch, is held by private investors.
``Only government will mine diamonds,'' Mugabe said. Diamonds will fall into a ``special category,'' he added, accusing exploration companies of selling the gems they find illegally. Mugabe threatened last May to take control of the country's foreign-owned mines and never followed through.
Zimbabwe, the world's fastest shrinking economy, in 2000 began a program of seizing white-owned commercial farms for redistribution to black subsistence farmers deprived of land during white rule that ended in 1980. In the process export earnings plunged, deepening a recession now in its ninth consecutive year, and inflation soared to 1,594 percent, the world's highest rate.
``If the state takeover of diamond mines is passed into law, it will destroy diamond exploration in this country,'' Andrew Cranswick, Chief Executive Officer of African Consolidated Resources plc, said in an interview today from the capital, Harare.
Shares of Rio Tinto fell 37 pence, or 1.3 percent, to 2,783 pence on the London Stock Exchange at 3:56 p.m. local time. The stock has risen 2.4 percent so far this year. RioZim's shares closed unchanged at 9,000 Zimbabwe dollars on the Zimbabwe Stock Exchange today. The stock fell 3.2 percent yesterday.
Murowa produced 187,000 carats last year. River Ranch's production is not disclosed. Debswana, a joint venture between Botswana's government and De Beers, mined 34.2 million carats last year. Botswana is the world's biggest diamond producer.
Mugabe has repeatedly threatened to seize mining assets in the country that has the world's second-biggest platinum and chrome deposits after South Africa. He didn't mention Rio Tinto.
``The word nationalize wasn't used,'' Nick Cobban, a spokesman for Rio Tinto in London, said in an interview. Mugabe said he would ``monopolize'' industry.
Rio doesn't believe the comments pertain to its mine, he said.
``We don't believe there has been a change in policy,'' Cobban added. ``We believe they were made specifically about the situation in the east of the country.''
Mugabe's threat is similar to those made by leaders of other emerging economies who want their citizens to benefit more from their countries' natural resources. Venezuelan President Hugo Chavez said Jan. 9 he plans to take control of ``strategic'' assets in the nation's energy industry, while Bolivian President Evo Morales has said he would nationalize his country's oil and gas reserves.
It is unclear whether Mugabe's latest pronouncement will be made law, said David Murangari, Chief Executive Officer of Zimbabwe's Chamber of Mines, a business association that represents most mining companies in the country.
``We are studying the situation and will discuss it with the mining industry if that's really government's intention, but currently there is no law that specifies certain minerals can be mined only by the government,'' Murangari said in an interview.
Zimbabwe's government on Dec. 7 evicted African Consolidated from Marange, a deposit to which the Nettlestead, U.K.-based company had the rights, after a diamond find there prompted thousands of informal miners to converge on the area. The area has now been cordoned off and handed to the state-run Zimbabwe Mining Development Corp.
``I've never believed in nationalization and as a citizen of Zimbabwe I'd say it's a mistake,'' Cranswick said. ``As a mining explorer, well, we'll have to review the whole country if this becomes a legal reality.''
African Consolidated had formed alliances with government ministers and officials, Mugabe said.
``Government ministers and members of the politburo joined ACR, but we said no to that company,'' he said. African Consolidated is challenging the eviction.
De Beers, the world's biggest diamond company, discovered the Marange deposit and passed it on to African Consolidated, Mugabe said. De Beers's spokesman, Tom Tweedy, didn't immediately answer calls made to his mobile phone. De Beers is 45 percent held by Anglo American Plc.
Demand in the $12 billion market for rough, or uncut, diamonds has weakened after three Federal Reserve interest rate increases in 2006 added to the debt burden of cutting companies. The U.S. accounts for about half of all retail diamond sales.
Polished gem prices rose a maximum 1 percent last year, Richard Platt, a director of Antwerp-based Polished Prices.com, which tracks diamond prices, said Feb. 9. He forecast a recovery, with prices rising 9 percent this year.
No-one at RioZim and River Ranch was available to comment when contacted by Bloomberg News today.
Zimbabwean diamond production ranks behind Botswana, South Africa, Namibia, the Democratic Republic of Congo and Angola in Africa. The continent produces 65 percent of the world's diamonds, according to De Beers.
Zimbabwe Government Seizes Marange Diamond Mines
(April 29, '07, 8:38 IDEX Online Staff Reporter)
Sidestepping a legal battle, Zimbabwe’s Mining Development Corporation (ZMDC), a government-owned company, has seized control of diamond exploration in the country’s Marange district. The company is also ascertaining the quality of the mineral.
The takeover is being challenged in local courts by African Consolidated Resources (ACR), a British-owned concern that has explored the area and found the diamonds before their exploration license was canceled by the government.
The company’s position has been strengthened by a legal opinion issued by the Zimbabwe Attorney General’s Office calling the takeover into question.
Zimbabwe’s Mines permanent secretary Thabani Ndlovu told local media that the seizure of the mines was a “matter of national interest and that Zimbabwe was entitled to the full benefits of her resources.” Government mining officials said ACR had no legal title to the diamond claims, leaving ZDMC the rightful owners.
"The ZMDC has begun trial mining for alluvial diamonds and are also recovering some diamonds from their pilot mining," said Ndlovu.
Impoverished Zimbabweans hoping to strike it rich have been flocking to the area since diamonds were discovered there last year. The military has sealed the area to prevent spiraling illegal mining and stem the loss of foreign currency which to date has been estimated at $400 million.
Zimbabwe says a revised mining and minerals bill will soon be presented to the country’s parliament for approval, sparking fears that foreign companies will be forced to surrender 51 percent of their equity to locals as part of Zimbabwe’s nationalization campaign.
The Mines Ministry awarded the Minerals Marketing Corporation of Zimbabwe three special grants to explore diamonds in Marange after invalidating ACR's titles, later ceding the claims to ZMDC.
According to observers, Zimbabwe’s government desperation to raise foreign currency to buy essential goods like fuel is behind the Marange takeover.
September 29, 2007, 4 :05 PM
Harare - Zimbabwe's proposed empowerment law will hit production in the nation's top foreign currency earning sector, which is already grappling with exchange rate and power problems, an industry official said on Friday.
Zimbabwe's Chamber of Mines, a representative body for an industry still dominated by foreign firms, said the bill was a blow to miners, who contribute about 35% of the country's foreign currency earnings.
"We have all sorts of problems, but these have been made worse by the recent passing of the empowerment bill," the chamber's acting chief executive Douglas Verden told Reuters.
"We must have a foreign investor-friendly environment because mining is very expensive...if government decides to take over 51%, then foreign investment will cease. No foreign investor will come in knowing they will not take control."
On Wednesday, President Robert Mugabe's government pushed through parliament a bill allowing the transfer of majority control of all foreign-owned firms - including mines and banks - to black Zimbabweans.
The bill is expected to sail through the upper Senate, also dominated by Mugabe's ZANU PF, before being signed into law.
Anglo Platinum and Impala Platinum - the world's number one and two platinum producers - and Rio Tinto are some of the foreign mining companies with investments in Zimbabwe.
Verden said the industry, which had been consulting with the government over the past five years regarding the empowerment law, would wait to see how the law would be applied, particularly to firms with considerable social investments.
"Die is cast"
"The die is cast, now we wait and see," Verden said.
"The bill itself as it stands is an enabling act, allowing the minister to make regulations. We are now waiting to see exactly what transpires."
Indigenisation and Economic Empowerment Minister Paul Mangwana has said government would allow companies to comply to the newrules gradually.
Verden said miners were concerned about how they would be paid for shares to be transferred to locals.
"It's still unclear, but we've heard of some fanciful options such as financing the purchase through dividends - remember not many mines are making profits at the moment - or in the Zimbabwe dollar, which is worthless."
Mining output, especially in the key gold sector, would decline further due to the added uncertainty surrounding the bill, persistent electricity cuts and the flight of skills.
Verden said Zimbabwe was losing ground to other countries on the continent with friendly mining policies.
Government officials say Zimbabwe's mining output dipped by 14% in 2006, while gold deliveries to the central bank - the country's sole buyer of the metal - were down to 11 tonnes from 14 tonnes the previous year.
"Unless there is a huge increase in production in the last two months of the year, which is most unlikely, we will have about 8 tonnes of gold this year," Verden said.
"If we fall below the 10 tonnes mark, we will cease to be a member of the bullion club, meaning we'd have to market our gold through a third party... that would increase costs through commission and lead to delays in payment," he said.
Government to spend $60m fighting rebellion it refuses to acknowledge
(Source: Sunday Herald)
Economy crippled by violence and uncertainty as insurgents get better organised and hit harder
By Tristan McConnell in Agadez
YOU MUST be careful when you talk of the rebels," whispers an out-of-work tour operator in Agadez, until recently Niger's premier tourist destination, gateway to the Sahara desert and the dark jagged peaks of the Aïr Mountains.
"If you talk too much the army thinks you are one of them, then you are in trouble." He did not want to be named, nor overheard discussing the rebellion and the government reaction, both of which threaten the livelihoods of the residents of Agadez in Niger's north.
Soldiers man checkpoints while military pick-ups armed with large- calibre machine guns trawl the dusty streets; desert nomads swaddled in bright white or deep indigo turbans have slung hand-crafted swords over their tunics; and the little airport, once a weekly destination for charter flights from Paris and Marseilles, is deserted save for the occasional military plane.
Outsiders are no longer welcome in this ancient city on the southern edge of the Sahara, where desert sand sticks in the throat and the burning sun scorches from sunrise until dusk. Most hotels and restaurants are shut, tour companies are closed down and expatriates have driven the 1000-kilometre journey west to the capital, Niamey, or returned to their own countries. Aid workers have pulled out, visitors are scarce, foreign journalists banned; and residents of Agadez look around warily before whispering of "l'insecurité" - the insecurity - that has brought this all about.
In February, a rebel group calling itself the Niger Movement for Justice (known by its French acronym MNJ) announced its arrival with an attack on the oasis town of Iferouâne, in the volcanic Aïr Mountains, in which three soldiers were killed.
Since then the MNJ has stepped up its attacks, documenting them on a weblog. It claims to have killed more than 50 Niger soldiers and taken dozens more hostage. It has attacked a uranium mine run by a French company north of Agadez and kidnapped an executive from a Chinese firm prospecting in the region. Now it is Ramadan, and it has announced a cessation of attacks for the month.
The Tuareg leaders of the MNJ say they want increased political representation and a greater share of the paltry national wealth in Niger, which is consistently ranked as the world's poorest country by the United Nations. What little wealth there is comes from uranium mined in the desert, and potentially from oil lying beneath the sands in areas the light-skinned nomadic Tuaregs call home.
President Mamadou Tandja, a former soldier, has earmarked $60 million to fight the rebels. Last month he declared the desert north to be under a "state of alert", effectively placing two-thirds of West Africa's largest country under military rule, with restrictions on movement, regular ID checks and curfews in some towns. All this in response to a rebellion the government denies is even happening: it has so far refused to recognise or negotiate with the rebels, blaming the attacks on bandits, criminals and drug traffickers.
The Sahel - meaning desert shore or edge - is a restive part of the world, awash with guns and criss-crossed with the tracks of lorries carrying hopeful African immigrants towards Europe. It includes parts of Mali, Niger, Chad, the Central African Republic, Sudan and Ethiopia, all of which suffer varying degrees of lawlessness and insecurity made worse by poor state control and the life-and-death battle for scarce resources causing clashes between nomadic pastoralists and sedentary farmers.
Niger's rebels are the descendants of a 1990s rebellion fought for much the same reasons, but are resolutely modern in their techniques: they update their website regularly, respond quickly to emails and use satellite telephones to break the government's attempt to impose a news blackout.
Local observers say this time the rebels are also better trained and better educated, counting disaffected soldiers and university graduates among their number. However, the rebel group is still seen as an ethnic militia fighting for a single interest group.
The impact of the rebellion is being felt more widely, however, with international interests being drawn into the conflict.
Niger is one of the world's top uranium producers (accounting for 8% of total output) at a time when prices have risen dramatically as nuclear power has once again become flavour of the month, especially in the booming economies of India and China. The Niger government has issued another 60 uranium exploration permits to a range of international companies, and there is also interest in proven reserves of 324 million barrels of oil close to the border with Chad in the east.
Mining firms Areva and Sino-U, French and Chinese respectively, have suffered attacks and the rebels have warned foreign miners to leave the area. Meanwhile, accusations fly back and forth, with the MNJ accusing China of supporting Niger's military effort in return for mining contracts and the government accusing Areva of supporting the rebels in order to maintain its de facto monopoly on uranium mining.
The government has also accused Libya's Muammar Gaddafi of supporting the MNJ, citing a long-standing border dispute between the countries.
For now, the impact is being felt on the ground in Agadez, at the heart of the insecurity. The tour operator says: "The government and the rebels need to talk, not to fight. Normally you have a war and then you have the talks, but in this case the talks are not coming."
In the meantime, he and others in Agadez, caught between the fighting parties, are seeing their already tenuous livelihoods collapse.
On the outskirts of town, business is still brisk in goats and sheep but few are buying higher-value animals, such as camels and cows. Prices have fallen because people are less willing to travel the long distances to market for fear of the army, the rebels and the landmines which both sides have been laying.
In such a tightly-knit economy the knock-on effects are felt everywhere. Many buy food during the year on credit, knowing that when the tourist season begins they will be able to pay back the loans. Tour operators buy food and fuel from local traders, and employ cooks and drivers.
"Every year it is quiet in June and July but we know that the tourists will come in December. But this year we know there is nothing," says one despondent tour operator.
Areva uranium prospection in Niger attacked by armed group
04.20.07, 10:34 AM ET
PARIS (Thomson Financial) - An uranium prospection camp belonging to Areva in Niger has been attacked by an armed group, according to industrial sources in the capital, Niamey. The attack took place at around 3.30 am at the site at Imouraren, about 85 km south of Arlit, the country's major uranium production region, the sources said. One member of the Niger armed forces was killed and three injured in the attack, waged by 20-30 heavily armed men, who arrived in three 4X4 vehicles, the sources added. Once inside the camp, the raiders took six vehicles and many mobile phones. They claimed to belong to Mouvement des Nigeriens pour la Justice (MNJ), a group believed to be led by Aboubacar Alambo, the sources said. Around 250 people were in the camp, which is currently Areva's biggest exploration project in Niger. It is the first attack of this type for some years,' a sector source said. Niger is the world's third largest uranium producer with a 9 pct market share in 2003.
WEST REGION NEWS (Africast)
Niger to produce 10,500 tonnes of uranium a year
NIAMEY, May 03 -- Niger communication minister and government spokesman Mohamed Ben Omar has said his country plans to raise its annual uranium production to 10,500 tonnes a year in the next few years.
"We have awarded prospecting and exploitation permits, which enable us to significantly increase our production. The figure will rise from the current 3,500 tonnes to 10,500 tonnes a year in the next few years," he said while on a visit to Paris late Wednesday.
Speaking at a news conference, Omar said French group Areva will remain Niger's strategic partner in uranium exploitation.
"Niger is a sovereign country, which may diversify its economic relations. This is the reason why we have awarded permits to various companies. But Areva remains for us the reference partner," he added.
"We are not going to use the rise of the price of uranium to 120,000 francs CFA a kilogramme as an excuse to break up with Areva, which was buying our production at an acceptable price even in difficult times," the minister added.
Reacting to statements by non-governmental organisations (NGOs) on the health and environmental consequences of uranium exploitation in northern Niger, he said Areva plans to invest about 540 billion francs CFA in the well-being of people living in the affected area.
"We had about four hours' discussion with Areva before the opening of its Immouraren site. Areva officials assured us that everything will be done to protect the environment and people's health through the investment of several billion of francs CFA," Omar said. PANA
Uranium exploration firms flock to Niger desert
Sat 12 May 2007, 14:09 GMT
By Abdoulaye Massalatchi
NIAMEY (Reuters) - Niger has granted a wave of permits to British, Canadian and Indian mining firms allowing them to explore for uranium in its desert north, the West African country's government said on Saturday.
A total of 23 permits were granted to three Canadian firms, three British firms and an Indian company, enabling them to explore in the former French colony's Arlit and Tchirozerine regions, vast swathes of land in the southern Sahara desert.
Canada's Southampton Ventures Inc, Delta Exploration Inc and UraMin Inc., Britain's COJ Commodity Investments Ltd., Agadez Ltd. and Indo Energy Ltd., and India's Taurian Resources Pvt Ltd. between them pledged to invest some $55 million in exploration activities over the next three years.
The government has already granted around 70 mining exploration permits, mostly for uranium, and around 100 more are currently under consideration.
Zambia a hotbed for uranium exploration
Dec 26 2007 02:22 PM (News24)
Lusaka - Resurgent global interest in nuclear power has made Zambia, a southern African nation better known for its vast copper reserves, into a hotbed of uranium exploration.
The search for uranium in Zambia is part of a larger wave of uranium exploration and mining across mineral-rich southern Africa that is raising hopes of new jobs and tax revenue, but also sparking debates over safety and security.
Many countries are looking for cleaner and cheaper alternatives to oil and coal power, and uranium prices are high after a decades-long slump.
African Energy Resources Ltd, an Australian-owned mining outfit, is drilling on the southern border with Zimbabwe. Canadian-owned Equinox Ltd said in November that there is high-grade uranium in the Lumwana open pit copper mine in northwestern Zambia, and hopes to begin stockpiling it next year.
Zambia's government is now completing new regulations to cover the mining, processing and export of uranium products, says Maxwell Mwale, Zambia's deputy minister of mines and mineral development for large scale mining projects.
"We are assured of a market in the sense that demand for nuclear power is increasing. Now there are these global warming concerns and issues of reducing carbon emissions, so nuclear power is attractive," Mwale told The Associated Press. "We had to put in place regulations that conformed to International Atomic Energy Agency standards."
Elsewhere in Africa, exploration is ramping up across the border in Botswana. Namibia's uranium exporting industry has seen a revival, with a US$112 million expansion of the long-running Rossing open mine and the opening of a new mine in 2006 by Australian-owned Paladin Energy Limited.
It's the "biggest push on uranium exploration since the late '70s," says Alasdair Cooke, executive chairman of African Energy Resources, which has poured $8m into its exploration project with Albidon Mining Ltd, in southern Zambia over the past three years. "With the global energy market coming under so much pressure (from) new economies, uranium has become part of the mix."
Faced with domestic energy shortages, the government of South Africa released a draft nuclear energy policy in August pledging a rebirth in the country's uranium mining, processing and enrichment industries, and the construction of new nuclear reactors over the next decade.
The region's economic powerhouse, South Africa gave up its nuclear weapons program following the end of apartheid in the 1990s but still has two nuclear reactors that produce 6% of the country's power.
The scramble for uranium marks a stark turnaround after a decades-long industry slump brought on by the 1986 disaster at Chernobyl that made nuclear power a dirty phrase, and the end of the nuclear arms race of the Cold War.
Concerns over climate change and pollution created by coal, along with high oil prices, have sent uranium prices from less than $10 per pound at the start of the decade to a current price of about $92 per pound. Many countries, including the United States, are planning to build new nuclear reactors, and China is looking to imported uranium for the many nuclear reactors it will use to help fuel its massive economic growth.
Mining companies are looking to countries across Africa. Niger is the world's fourth largest uranium supplier and produced 3 434 metric tons in 2006.
In southern Africa, the search focuses on the uranium-enriched crust of what geologists call the Karoo Basin. Namibia and South Africa are believed to hold six percent and seven percent, respectively, of the world's recoverable uranium resources, trailing only Australia, Kazakhstan, Canada and the United States, according to the World Nuclear Association, a nuclear power industry advocacy group.
Up-to-date estimates of Zambia's potential are hard to pin down. Here, long-standing uranium exploration started by Italian and Japanese investors ground to a halt in the 1980s.
"With the price increase we've seen in the last couple of years, the uranium resource is now quite economical" to mine, says Harry Michael, chief operating officer of Equinox Minerals Limited, an Australian and Canadian venture that is running Lumwana Mine, along Zambia's border with Congo. At Lumwana, uranium deposits mingle with copper, and will be mined as part of the same process.
Uranium mining could create valuable jobs in mining, transportation and other sectors in a country where about 20 percent of the work force is formally employed, deputy minister Mwale said.
"We would like to see (uranium) mining development so benefits can accrue to our people, and also in terms of revenue to the central treasury."
Other than more developed South Africa, most nations in the region will remain, for the moment, suppliers of uranium rather than users of it. How much those countries will benefit from their exports will be a key question for policy makers.
The issue is sure get attention in Zambia, where the government has been promising for more than a year to increase taxes on foreign copper mining companies that secured minuscule tax rates early in the decade when copper prices were low, and are now reaping huge profits.
Even though nuclear power is seen by many as the environmentally friendly energy source of the future, industry officials still face opposition from some environmental groups and other skeptics.
Just east of Zambia, in Malawi, the government's grant of a uranium mining license to Paladin, sparked complaints from the Center for Human Rights and Rehabilitation.
The Malawian government has a 15% stake in the project. While the local group acknowledged that the almost $200m mining project could create jobs and profits, it questioned its effect on the environment and whether "the economic benefits to Malawi through the introduction of uranium mining operations outweigh the social concerns and hazards associated with them," in a recent press statement.
Experts in the industry say that while radon gas emitted by uranium presents some radiation risks, modern technology makes them negligible to workers and the public. Radiation exposure is low in open cut mining, and can be further lessened by enforcing strict hygiene regulations on miners using uranium oxide concentrate, according to the industry's World Nuclear Association.
In an underground mine, modern ventilation systems are needed to keep miners safe, the association says.
In some regions, the increased demand for uranium has prompted security concerns, especially amid reports of illegal uranium mining across the border in Congo - the same area that produced some of the uranium used in the atomic bombs dropped over Hiroshima and Nagasaki during World War II.
Counterterrorism experts worry about extremists getting radiation materials through a black market for nuclear components that operates despite attempts to tighten security. A growth in mining and processing could make security even more crucial.
Mwale, of the Zambia mining ministry, says that Zambia is being cautious.
"We are very particular, as a country, that there will be no lapses at any stage of the handling of the uranium product," he said.
"Banro Corporation wishes to clarify some confusion created in the market-place as a result of public statements made by La Quinta Resources Corporation (TSX-V - "LAQ") regarding properties located in the Democratic Republic of the Congo. The most recent such statements were set out in a press release of La Quinta issued on March 14, 2007.
"The Company's four gold projects, Twangiza, Lugushwa, Namoya and Kamituga, consist of a total of 13 exploitation permits 100% owned by wholly-owned DRC subsidiaries of the Company. The Company has a dispute with La Quinta regarding properties that the Company has applied for located between the Company's Lugushwa and Namoya projects. This dispute therefore does not in any way affect the Company's four projects, the titles to which are not in question. The dispute also does not affect in any way the 14 exploration permits that were recently acquired by the Company, which are located between the Twangiza and Kamituga projects and between the Kamituga and Lugushwa projects (see Banro press release dated March 8, 2007)."
BACKGROUND TO DISPUTE
"In 2003, shortly after implementation of the New Mining Code, Banro's wholly-owned subsidiary, Banro Congo Mining SARL ("Banro Congo"), submitted applications for 23 exploration permits ("PRs") covering ground (the "Disputed New Ground") between the Company's Lugushwa and Namoya projects.
"Soon after filing these applications, the Company was advised that WB Kasai Congo SPRL, a private DRC company, would be claiming priority to the Disputed New Ground based on applications for ZERs (Zone de Researches Exclusive) filed under the Old Mining Code in 1999. However, subsequent searches by the Company's DRC counsel and reviews of Mining Journals and Cadastre Miniere records failed to yield evidence of these ZERs registered in the name of WB Kasai Congo SPRL.
"WB Kasai Congo SPRL subsequently approached the Company in 2005 seeking to joint venture the Disputed New Ground. To address the possibility that WB Kasai Congo SPRL would be successful in its claim for priority, the Company decided to enter into an agreement with WB Kasai Congo SPRL regarding the Disputed New Ground. An agreement was signed in September 2005 between Banro Congo and WB Kasai Congo SPRL requiring Banro Congo to pay approximately US$113,000 over a 4 year period in addition to providing management and capital to develop the potential of the Disputed New Ground. The agreement contemplated that Banro Congo would hold 85% of the joint venture, with WB Kasai Congo SPRL holding 15%. The agreement was subject to WB Kasai Congo SPRL obtaining title to its PR applications. WB Kasai Congo SPRL subsequently repudiated its agreement with Banro Congo, and entered into an agreement with La Quinta, the validity of which Banro disputes.
"WB Kasai Congo SPRL proceeded with a lawsuit against Banro Congo, and has obtained a preliminary judgment in the DRC. This judgment, referred to in La Quinta's press release of March 14, is from a Congolese Commercial Court granting a US$200,000 award against Banro Congo for damages, essentially for obtaining a benefit on the value of WB Kasai Congo SPRL's PRs. The Company's DRC counsel finds the damages award puzzling as WB Kasai Congo SPRL was not in possession of title certificates during the period in question. Further, the Company's DRC counsel is of the opinion that the judgment was ambiguous when it failed to conclude that the agreement between WB Kasai Congo SPRL and Banro Congo was null and void. The Company will be appealing the judgment.
"The Company has been advised that the Ministry of Mines and Cadastre Miniere are currently reviewing the circumstances of WB Kasai Congo SPRL's applications for title to the Disputed New Ground. A decision is expected shortly.
"The Company believes it has valid claims to the Disputed New Ground, and is pursuing its legal rights in both Canada and the DRC."
Country Accuses Canadian Mining Firm of 'Cheating'
The East African (Nairobi)
March 13, 2007
Moto Mines Ltd, an Australia-based gold mining company listed on the Toronto Stock Exchange has found itself in the thick of an embarrassing controversy with authorities in the Democratic Republic of Congo, over a gold mining contract it entered into with the state-owned Okimo Mines Ltd in 2003.
The Canadian company, which operates in Congo under a local subsidiary, Borgakim Ltd, has been accused by the Congo government of misrepresenting to the markets the true value of the rights granted to it over some eight mines within the Kilomoto area, thus managing to raise between $60 million and $80 million from the Toronto Stock Exchange.
Apparently, the agreement covered a total of eight mines, seven of which were leased to the Canadians by Okimo Ltd under terms whereby the Canadian company will earn 70 per cent of the revenue and the state-owned company 30 per cent.
The eighth mine - consisting of Karagwa, Durba and Chauffeur mines - with indicated and inferred reserves of 12 million ounces of gold - was granted to the Canadians on a service contract basis.
According to articles three and four of the service agreement on the property, the Canadians were to act as financial and technical consultants and undertake an extensive exploration programme to establish a proven reserve base after which Okimo Ltd will undertake actual mining.
The agreement also stipulated that the Canadians would rehabilitate the infrastructure of the world famous Kilomoto mines.
The agreement further stated that the company would invest up to $100 million and be paid 70 per cent of revenues for a period to be determined at a later date - after which date 100 per cent ownership and the operations would revert back to the state.
Four years later, the total expenditure to date, as reported by the Canadians themselves, on the eight mines is over $25 million, of which some $4 million-$11 million was spent on the eight properties under the service contract.
According to Congolese authorities, the Canadians have not spent any money on rehabilitation of the physical facility and have instead been concentrating on drilling the mines for more gold, which the authorities believe is a tactic to shore up the market capitalisation of Moto Mines at the Toronto Stock Exchange.
The controversy escalated when officials of the Canadian company told the Reuters news agency on February 26 that the company was still awaiting ratification of another protocol signed with the authorities in November 2006 before it can consolidate its operations.
The following day - February 27 - Assistant Minister for Mineral Exploration, Victor Kassongo told Reuters that a notice had been given to the Canadian company on January 26 informing them that the view of the government was that they (Moto Mines) were in breach of the contract on four of the mining properties.
Officials in Kinshasa have expressed concern that the Canadians have given a perception to the investing public that it is earning an interest and owns some other mines and has - contrary to the agreement - used proprietory information to promote the company's stock on the Toronto Stock Exchange.
Market watchers are following the controversy closely to see whether there are parallels with Bre-X Ltd - formerly a Canadian listed company, that lost billions in the stockmarket within days over claims that it had misrepresented the value of gold properties it owned and managed in Indonesia.
In response to the statement by Congo authorities, the Canadian officials are claiming that Okimo's notice is unjustified and the state-owned body is in breach of contract.
Meanwhile, a Paris-based law firm - White & Case - which was engaged by authorities in Kinshasa to look into the matter, has supported DRC's position, pointing out that the agreement on the disputed mines merely gave the Canadians the right to provide technical and financial assistance at a fee - and not an option to earn interest.
Mining pundits in the region are seeing parallels with a deal between Kenya and China's National Offshore Oil Co-operation, which has been given rights over six oil exploration blocks but has secretly gone behind the government's back to seek joint partners without informing Kenyan authorities.
As the ministry awaits the outcome of the Moto saga, Mr Kassongo told The EastAfrican in an exclusive interview that the government's plan in the coming months will be to take Okimo Ltd to the public market through the Toronto Stock Exchange, London Stock Exchange and its AIM market.
The minister said the government plans to raise $45 million by selling 15 per cent stake of the state company. The proceeds will be used to rehabilitate the mining infrastructure and also in an extensive exploration programme.
Mr Kassongo also disclosed that he had started discussions with Uganda's Department of Geological Survey and Mines to see if joint surveys can be undertaken.
The new Kinshasa government says it wants the mining industry to contribute $1 billion in revenues in the next 12 months said Mr Kassongo.
To achieve this, he further said that the government is reviewing all mining contracts and re-evaluating the commitments and obligations international mining companies have made. "Those in default will be advised to 'shape up or ship out," he said.
Mr Kassongo lamented that although Congo is endowed with significant minerals and known reserves, its annual budget is only $2.5 billion compared with Angola which has an annual budget of over $29 billion
Camec selling the family silver through lack of copper and cobalt (Source: Mineweb)
A forensic examination of the factors contributing to the failure of Camec’s bid for Katanga Mining.
Author: Barry Sergeant
Posted: Tuesday , 18 Sep 2007
Following its failed bid for Katanga Mining (KAT.T, C$18.05), Central African Mining & Exploration Company (Camec, CFM.L, £0.25) has started selling its only real material asset, stock that it previously acquired in Katanga Mining. Camec had acquired 22% of Katanga Mining prior to launching an official bid for full control of the company at the end of last month.
The bid came crashing down within hours, following the appearance of a letter dated Wednesday, 29 August, 2007, and signed by Tshimanga Mukeba, attorney general of the Democratic Republic of the Congo (DRC). This informed Boss Mining and Mukondo Mining that relevant licences, as purportedly transferred by DRC parastatal Gécamines in February 2004, had been annulled and voided. Starting early in 2006, Boss, purportedly now 80% held by Camec, had been sold, in chunks, to Camec by Muller Conrad "Billy" Rautenbach, a fugitive from South African justice, and recently declared persona non grata in the DRC.
Haywood Securities, London, has confirmed that on Friday it sold 4m Katanga Mining shares on behalf of Camec, at C$18 per Katanga Mining share, raising roughly C$72m. The sale represents nearly a third of the 17m Katanga Mining shares held by Camec. According to market sources, the sale was made in order to repay $60m Camec raised from Credit Suisse.
On June 15 this year, Camec was granted a $60m facility by Credit Suisse, with the loans to be repaid in full on final maturity date, 18 June, 2009 . Almost immediately, Camec drew down $25m under the facility on 18 June, 2007, and the balance of $35m taken on July 13. According to market sources, however, the Credit Suisse facility was in fact put through on a "success" basis of Camec indeed acquiring all of Katanga Mining. But even if this was not the case, Credit Suisse would have had every reason to call the loan in, not least over worries in credit markets.
In any event, Camec is cash starved. While enthusiastically marketing itself as "an integrated exploration, mining and production company operating in Africa" Camec has battled to show up any real profits. Its financial statements for the year to 31 March, 2007, show a cash outflow from operating activities of £1m, before capital expenditure and financial investment (which typically characterises an expanding company.) To that end, Camec had raised £100m in an equity placement in May and June of 2006. Camec's fiscal 2007 cash outflow before the use of liquid resources and financing is reflected as £120m for the year. After financing inflows of £99m for the year, cash left in the bank on 31 March, 2007, was just £13m. As for profitability, nowhere in Camec's voluminous circular filed for the now-failed acquisition of Katanga Mining were any figures provided for copper or cobalt production. The majority of Camec's turnover was attributed to "trading" activities.
However, Credit Suisse may equally have become spooked by possible non-disclosures on the side of Camec. It is public knowledge that DRC authorities launched a review of mining licences and concessions earlier this year. Less well known is that Rautenbach's licences, which date back to 1998 to 2000, have been under investigation for some time. In a UN Security Council report dated 18 July, 2006, Rautenbach is listed as a "due diligence failure" in respect of Camec. Reason given: "Billy Rautenbach is a major shareholder of [Camec]. He is wanted by the authorities of South Africa for fraud and theft". The same reason is cited for the due diligence failure of Camec's purported acquisition of Rautenbach's Boss Mining.
The report noted that the DRC's Mining Cadastre lists 2,144 mining and quarrying concessions, and that "an undetermined number appear to be held by concessionaires affiliated with investors whose personal and professional integrity is doubtful. This lack of transparency provides hiding places for sanctioned individuals, financiers of embargo violators and for other individuals who simply do not meet the standards of the Code Minier".
These disclosures appear to have meant little, if anything, to investors, and stock promoters. Camec's stock price moved from around 10 pence a share early in 2006 to nearly 100 pence a share around the time of the release of the damning UN report, and then declined later in the year, mainly on a contraction in copper prices. But having clandestinely dealt with Rautenbach, to ostensibly acquire his DRC assets, Camec executives Phillipe Edmonds and Andrew Groves were well advanced in spinning professional investors.
The second page of Camec's 2006 annual report said Camec was "on track to produce 8,200 tonnes of cobalt in FY2006 to 2007 and that Camec aimed to "deliver 10,000 tonnes" of copper cathode in the 2007 financial year, and "reach template capacity of 100,000 tonnes by end-December 2008". As noted, Camec's annual financial statements for fiscal 2007 neither reflect nor record any production figures whatsoever for either cobalt or copper.
But the froth continued; on 12 July, 2007, four analysts at Credit Suisse released a report on Camec. Jeremy Gray, Ephrem Ravi, Eily Ong and Hannah Kirby signed off the report, which increased the "target price" for Camec from 120 to a mind-boggling 150 pence a share. In the fine print, the report disclosed that "the analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (CFM.L) within the past 12 months".
From a huge distance, the Credit Suisse analysts lauded Rautenbach: "Having George Forrest on the ground in DR Congo alongside Billy Rautenbach makes for a powerful combination". Forrest, of course, is a DRC veteran, the founder of an industrial conglomerate, and is without peer in his knowledge of the quality of copper and cobalt assets in southern Katanga Province. It is no mistake that Forrest is the single biggest shareholder in Katanga Mining, at just short of 25%. Of all the brownfields copper cobalt projects in the DRC, there is little question that Katanga Mining is king.
The Credit Suisse report also said, in the fine print, that "as of the end of the preceding month, Credit Suisse beneficially owned 1% or more of a class of common equity securities of (CFM.L)". As early as 22 May 2006, Credit Suisse held 40.7m shares in Camec, then equal to 4.1% of Camec's issued share capital. This increased to as much as 90m shares, in March 2007, and then decreased to 74m in June, before starting to rise again, to 84m shares on August 20.
While Credit Suisse disclosed that it provided investment banking services to Camec within the past 12 Months, and that Credit Suisse expected to receive or intends to seek investment banking related compensation from Camec within the next three months, nowhere did the analysts make any mention of the fundamental problems with the Rautenbach/Camec licences in the DRC. No mention was made either of the singular fact that Rautenbach had originally secured licences during the DRC's recent wars, which claimed more than 4m lives.
In short, the Credit Suisse analysts represented squadrons of investors, including professional ones, with a half-baked story, plugging instead the wholesale spin rendered by Camec. But one smoke-and-mirrors factor stands out above all others, in that Camec is yet to answer criticism over its failure to publish copper and cobalt production figures for fiscal 2007. What is apparent, again in certain fine print, is that during fiscal 2007, Camec "purchased services and assets" amounting to £19m "from companies" in which "Rautenbach and his family continue to have a controlling interest".
In other words, no matter what Camec had purchased from Rautenbach, Rautenbach continued to keep his fingers in the money pots via undisclosed management contracts, or the like, such as marketing agreements. The earlier transactions had seen Camec issue tens of millions of shares to Rautenbach, who sold down, but even on 31 March, 2007, continued to hold 91m Camec shares, then equal to 7.4% of the company's issued shares.
It was in February 2006 that Camec acquired Rautenbach's wholly owned International Metal Factors (controlling 75% of Congo Resources Joint Venture) for some $105m, comprising 172m new Camec shares (at 18 pence a share) and $50m in cash. On 27 July, 2006, Camec bought the balance of 25% in Congo Resources Joint Venture for cash of £14m, giving Camec, according to some analysts, "the sales, marketing and distribution rights to all products mined" on the Rautenbach/Camec concessions.
Really? What about Congo Cobalt Company (CoCoCo), which apparently owns and operates a cobalt processing plant in the town of Likasi, as well as various other processing plants and facilities located on the concessions owned by Boss? CoCoCo also "owns various mining equipment, including extraction equipment, diggers and lorries". Camec recently stated that its mining in the DRC "is contracted out" to CoCoCo, and that Camec is providing mining equipment to CoCoCo "on a commercial remuneration basis", implying that CoCoCo remains under exterior control. CoCoCo is, naturally, a Rautenbach entity.
Of note also is that Camec has attempted to create the impression that it has firm legal grounds in anticipating that its DRC concessions will be restored. On August 31, Camec noted that Boss's predecessor filed claims in an international arbitration, and that the arbitration "was settled by an agreement dated 25 February, 2004. However, in early 2006, an affidavit submitted to the British Virgin Islands High Court by Rautenbach ex-partner, Geneva-based lawyer James Anthony Tidmarsh, presented a different story.
In 2000, when Rautenbach was stripped of his DRC assets, he was allegedly offered an opportunity as a "sleeping partner" in Kababankola Mining Company (KMC), to which the Rautenbach assets were transferred. Rautenbach, however, refused and, indeed, launched an international arbitration action to challenge the withdrawal of his concessions.
In April 2002, Rautenbach withdrew the application following a settlement reached with the government of the DRC. But even then, the story is never as convincing as that presented by Camec. According to earlier UN Security Council reports, the DRC government relied on Gécamines as a means to ensure the continued support of the Zimbabwean army's support of the DRC government - the so-called Operation Sovereign Legitimacy (Osleg). Rautenbach had been named MD of Gécamines in November 1998, during a visit to Harare by the DRC's erstwhile president, Laurent-Désiré Kabila.
According to this deal, some of Gécamines' best cobalt-producing areas were transferred to a joint venture between Rautenbach's Ridgepoint Overseas Development and the Central Mining Group, a Congolese company controlled by Pierre-Victor Mpoyo, then DRC minister of state. Rautenbach also acted as MD of the joint venture, criticized by the UN as "a blatant conflict of interest". The UN had information that Kabila's decision to appoint Rautenbach - "a man with no mining experience but with close ties to the ruling ZANU-PF party in Zimbabwe" - was made at the request of Zimbabwe president Robert Mugabe.
According to the UN, Kabila replaced Rautenbach with Forrest in March 1999, reportedly after Rautenbach failed to pay the government's share of profits from the joint venture. Kabila accused Rautenbach of transferring profits to a shell company, as well as stockpiling cobalt in South Africa. The so-called Rautenbach DRC assets were then officially transferred, allegedly upon the instructions of Kabila, to John Bredenkamp's Tremalt, which established KMC. Upon the 25 February, 2004, agreement, the so-called Rautenbach assets were transferred back to Rautenbach, with the exception of 50% of Mukondo Mountain. Bredenkamp has always claimed that he received no compensation for the rest of the deal.
The history of the Rautenbach DRC assets has never been fully discounted by investors and analysts. In an otherwise fair and recent report, analysts Paul McTaggart and Shamim Mansoor of HSBC state that while it is "difficult to follow the machinations of DRC politics, the fact is that the transfer of the ownership of the C19 lease to Mr. Rautenbach has already been contested once and subsequently restored. Presuming that the subsequent acquisition of Boss Mining by CAMEC was completed with all in order, it seems to us that there is a reasonable likelihood of the C19 lease being retained by CAMEC". The analysts only mention C19. The so-called Rautenbach assets - under the Boss Mining umbrella - include the 50% stake in Mukondo, and concessions C 19 (23,000 hectares) (within which Mukondo Mountain sits, like an island), and C 21 ( 12,000 hectares).
Mukondo Mountain, possibly the world's richest cobalt deposit, is currently held, leaving aside recent declarations, 40% by Savannah Mining, 20% by Gécamines and 40% by Boss Mining. Bredenkamp sold his 40% stake in Mukondo Mountain to Savannah in July last year. The mine was immediately shut down, on the basis that the "Rautenbach way" of dealing with mining profits would have to be completely re-negotiated. The mine has remained shut to this day, starving Camec of profits from its single most potentially lucrative interest. The Credit Suisse report mentioned does not once refer to Mukondo Mountain; HSBC appears to lump it in as part of C19.
But back to the wars: Osleg, the mechanism whereby the Zimbabwe government was supposed to recoup the cost of its military intervention in the DRC through exploitation of a series of commercial concessions, mostly in the DRC mining sector, ended in disaster. By the time the Zimbabwe Defence Force eventually withdrew in 2003, it was patently clear that Zimbabwe's exchequer had benefited little, while senior political figures in ZANU-PF and senior Zimbabwe military officers had made vast fortunes. Rautenbach was one of the key conduits, as outlined by the UN in its series of Panel of Experts Reports on the Illegal Exploitation of Natural Resources and Other Forms of Wealth in the DRC. Rautenbach and others were players in an "elite network" of corrupt politicians, military commanders and shady businessmen that organised the transfer of billions of dollars of state assets to private companies with no compensation or direct revenue benefit accruing to the state treasuries of either the DRC or Zimbabwe.
Consider that against this background, Camec sought, and succeeded, no matter how briefly, in achieving a degree of legitimacy for the Rautenbach assets by their inclusion in a listing of the AIM division of the London Stock Exchange. But consider also, the ruthless hedge funds who sold out Katanga Mining shares to Camec, ahead of Camec's official bid for the rest of Katanga Mining.
On April 27 this year, Camec bought 1.6m Katanga Mining shares from P. Schoenfeld Asset Management LLC, for C$8m, and 11.9m Camec shares. On May 4, Camec bought 224,612 Katanga Mining shares from CASAM Pendragon Event Value Fund Limited, for 2.8m Camec shares; 5.6m Katanga Mining shares from North Sound Capital LLC, for $23.5m and 44.6m Camec shares; 1.1m Katanga Mining shares from Pendragon (Master) Fund Limited, for 14m Camec shares; 995,500 Katanga Mining shares from Amber Master Fund (Cayman) SPC, for 12.6m Camec shares; 131 130 Katanga Mining shares from The Matterhorn Resources and Energy Fund, for 1.7m Camec shares, and 229,170 Katanga Mining shares from The Wildhorn Master Fund, for 2.9m Camec shares.
With the first sell down of Camec's Katanga Mining shares, the family silver has been reclassified. Camec is scavenging, burning cash as its story continues to rot. Investors who paid 80 pence a share when Camec raised £100m in May and June 2006 are now staring a 25 pence a share price in the face. Just a few days ago, Camec traded at multi-month lows of 23.5 pence. But it is not just the hedge funds: earlier this month, Lehman Brothers International (Europe) disclosed a holding of 107m shares in Camec. As for Credit Suisse, it was on June 15 this year, when it granted the $60m loan to Camec that Camec granted Credit Suisse warrants to subscribe for 12m Camec shares at 55 pence per Camec share.
Ignoring the balance of Camec's motley collection of assets, its stock price is worth 11 pence a share, based on the remainder of shares Camec holds in Katanga Mining.