SIKI MGABADELI: We are having a sit-down discussion at the Investing in African Mining conference for 2015, speaking to the CEO of the Chamber of Mines, Bheki Sibiya. Bheki, thank you for making the time for us today.
BHEKI SIBIYA: It is my pleasure. Good afternoon to you.
SIKI MGABADELI: Your sense of how this year’s Mining Indaba has gone? This is the 21st year in South Africa, and, from all indications, it has grown to become a truly African mining indaba.
BHEKI SIBIYA: We are, as the Chamber of Mines, excited about how the Mining Indaba has grown, and we are excited that it continues to promote investments in the whole of the African continent, where there are mineral deposits, excited about how the transition from the previous owners to the current owners has happened in such a manner that it’s seamless. And therefore the Mining Indaba continues to be a wonderful investment platform for the mining industry.
SIKI MGABADELI: What role does the Chamber play in setting the South African mining landscape apart from our other competitors, who are of course also our friends on the African continent?
BHEKI SIBIYA: Well, the Mining Indaba is owned and operated outside the African continent. However, when one looks at the good corporate social investment work which is done, but also just the promotion of the investment, it’s great. And when one looks at the presence of the African mining ministers in the Indaba itself, it is great. There is a wonderful diversity.
We started on Sunday with the African mining ministers symposium, where we were debating a number of issues, supported by the World Bank, and indeed the African Union. And of course the main ones with the presentations you have heard, with our host minister, Mr Ngoako Ramathlodi, setting the scene as he did, to say South Africa and Africa is open for mining business was exciting. And for him indicating then in Africa we are looking at providing the stability and the predictability – we are excited about that as well.
For us, though, in South Africa we were a bit challenged and we are going to engage with the minister because he has re-introduced the “developmental pricing” concept, and that is a challenge. However, we have a dialogue and an engagement with the minister and the ministry, and therefore are going to engage them on that subject, because otherwise it becomes a pimple on a wonderful, beautiful African face.
SIKI MGABADELI: And of course the Chamber of Mines had really negotiated quite specifically on the gate price, right? You made a lot of concessions, talking about what would work and what wouldn’t. What’s your issue with this so-called developmental price?
BHEKI SIBIYA: The developmental price is generally below the market price. When it is below the market price and you are not so sure how it is going to be formulated, therefore, in a sense one interferes with free enterprise. And free enterprise has got to be free within the accepted rules. And so investors, when they look at this, they say we understand the cost of entry, the cost of operation, but if we cannot predict reliably and sustainably the revenue which we are going to get, we are not in a better position to assess the investment opportunity so as to say its going to grant us the returns we require on a sustainable basis.
And suppose they come up with a formula and the amount which they get they don’t like, then it gives them the opportunity to change the formula and to get more returns at the expense of the investors. And, for us, we are saying the mine-gate price we have negotiated, we have agreed – may we stick to it. The minister is honourable. He said he is going to honour the agreement the DMR has reached with the Chamber of Mines. It included the issue of mine-gate price, and that actually, the mine-gate price, is the centrepiece of that agreement. So we are appealing to the minister to act honourably on the agreements which we have reached with his ministry.
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