Rhino threat persists as Petmin agrees to delist from JSE – Fin24

Cape Town – Protestors demonstrated outside mining firm Petmin’s headquarters in Bryanston on Monday, as shareholders agreed to delist the company from the Johannesburg Stock Exchange.

The protestors attempted to intercept shareholders including Investec, Old Mutual, Barclays Bank, Afena Capital and RECM to demand they divest from the firm completely. They held placards outside the headquarters, calling on the companies to divest.
The demonstration, which is a part of 350.org’s Global Divestment Mobilisation, focuses on Petmin’s Tendele coal mine, 10 km east of the Hluhluwe iMfolozi Park in Somkhele.

Petmin said in a statement on Tuesday that all resolutions regarding the firm intention to acquire all Petmin shares and delist from the JSE had been passed in a meeting on Monday. It said it expects to delist from the JSE on 7 June 2017.
The miner has indicated that it wants to start mining anthracite – a hard carbon form of coal – on the border of the Hluhluwe iMfolozi Park, which is essential to the survival of the white rhino.

“Tendele has expressed interest in mining 500 metres from the boundary of the iMfolozi Wilderness area resulting in hundreds of people being relocated and threatening the integrity of the Hluhluwe iMfolozi Park, the first game reserve declared in Africa 120 years ago, as a sanctuary for the last remaining Southern White Rhino in 1897,” 350.org said in a statement.

“Environmental lawyer Kirsten Youens is of the opinion that Tendele’s expansion under section 102 of the MPRDA requires a Public Participation Process for people living on the land to have the opportunity to comment. Tendele has failed to do this.”

The group says tension is mounting in Somkhele “where, for 10 years the mine management has been engaging with the traditional leaders and making agreements with them while ignoring the long list of complaints from thousands of community members who are directly affected”.

The “continuous scarcity of water, which is expected to worsen”, is also a concern, according to a letter by Ian Player Magqubu Ntombela Foundation Trust chairperson Iain Ewing to Somkhele Mine chief operating officer Jarmi Steyn.

He was recording the group’s “extreme concern about the expansion of Tendele mine” and stated that they “will endeavour to take whatever steps are necessary to prevent the mine’s expansion, given the sensitivity of the area with its close proximity to the Hluhulwe iMfolozi Park, which is an important protected area”.

Drought hits mining area, causing water concerns over mining

The region was knocked hard by the drought of 2016, an issue that was clear in Petmin’s annual report in 2016.

“One of the biggest challenges facing both the mine and the community was the severe drought afflicting KwaZulu-Natal, forcing us to restrict production and processing during parts of the year,” Petmin chairperson Ian Cockerill wrote. “Rains in the second half of the year and mitigating actions by management have now ensured sufficient process water at full production for the foreseeable future.”

Petmin said the risk of severe water shortage impacting operations had decreased and that the following was required to retain this level:

•    Maintain the abstraction licence for the Mfolozi River;

•    When the Mfolozi River does run, ensure top-up of storage dams;

•    Retention of water when it rains;

•    Ensure sufficient storage capacity;

•    Ensure maximum recovery of water throughout the process to ensure minimum water losses; and
•    Implement a number of projects/initiatives to obtain and retain water.

Somkhele Mine’s Steyn told Business Day in March that the mine had invested over R1bn into the surrounding Mpukonyoni community and concluded a BEE deal whereby the local community and employees owned 20% of the mine.

“Considering this as background, it would be a socioeconomic disaster for the Mpukonyoni area should the mine not be able to find alternative sources for continued production and reinvesting in the community,” said Steyn.

However, Sheila Berry of the Global Environmental Trust claimed that only a few people “benefit hugely; the rest get nothing” in a media response to Fin24 on Monday.

Petmin said in its 2016 annual report that in “terms of the BEE transaction entered into on 12 November 2015, Petmin now holds 80% of Tendele and 20% is held by a special purpose vehicle controlled by the local community and employees of Tendele”.

Petmin said in a statement that the delisting of shares will benefit shareholders due to the support of Capitalworks, through CorpVent, as a key shareholder. According to MiningMX, Capitalworks describes itself as “a leading, mid-market private equity business” and is based in Johannesburg with some $500m under management.

InvestMet Africa director Alan Still agrees that there has been no advantage to investors to hold the stock on the JSE. They paid R4m in the last six months to the JSE just to be a listed company, but got very little for it.

“Only 30% of the stock is held by day-to-day punters with another 45% being held by institutional investors for punters who buy unit trusts and other investment vehicles.

“The rest is in the hands of B-BBEE and management. I’ve tracked the stock for more than a year now and 8it has traded relatively flat during that time.

“Delisting is an acceptable option in that all shareholders have been made an offer to continue as shareholders (at a 10% premium) in the Newco off-market company that will be controlled by Capitalworks.

“Who will be responsible for raising capital for the mining operations including expansion.”

What bothers Still is that the public is short on facts. “What will happen after the de-listing and what has Petmin told shareholders about the future of its operations?

“Are the shareholders aware of Somkhele’s 4km contiguous boundary with the Hluhluwe iMfolozi Park Wilderness area, and that local organisations will vehemently oppose Somkhele’s expansion in that area as there will be undoubted environmental problems? Do they care? Are they aware of the water restraints that will be exacerbated by the South Africa Weather Service prediction of another El Nino?”

Petmin announced in March that it received Competition Commission approval for investors to buy back the shares from the JSE, while shareholders in April approved the move at the annual general meeting.

Petmin’s profit was R11m in 2016, a significant drop from R125m in 2015 due to costs of investment impairments.

Media queries to Petmin regarding the protest were unanswered on Monday.

This article appeared in Fin24

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