Steel giant ArcelorMittal South Africa (Amsa) appears to have found a political solution to its commercial problems by announcing two deals involving controversial Imperial Crown Trading (ICT). ArcelorMittal will buy ICT for R800-million if it is able to convert its prospecting rights at Sishen to full mining rights in its contested battle with iron ore giant, Kumba. It has also announced a BEE deal in which ICT's politically connected shareholders feature prominently.
ArcelorMittal has fought a low-intensity war with the government, which has been keen to see it pass on the benefits of the special developmental pricing it enjoys in securing cheap iron ore, such as from the giant Sishen mine. Its special pricing deal with Kumba's Sishen Iron Ore Company, intended to help supply the country with cheap steel, has been worth as much as R5-billion a year to the steel giant, according to one analyst. But ArcelorMittal has responded with aggressive pricing, which has seen it in an ongoing conflict with the authorities and has to date not moved to bring in empowerment shareholders.
Frustration with Arcelor-Mittal led the government earlier this year to threaten forced divestiture of its assets as a means to bring it to book. An analyst, who asked not to be named because of the political sensitivity of the matter, said that, by dealing with ICT, Amsa had legitimised an underhand process.
The deals with ICT have drawn fire because ArcelorMittal is seen to be siding with a party that secured these rights under irregular and possibly illegal circumstances. ICT won the right to prospect on an existing mine, one of the world's largest.
President Jacob Zuma's son, Duduzane, is a primary beneficiary of the ArcelorMittal deals with ICT, as are the Gupta family, who are known to have close links to the president. The Guptas are already very wealthy and, as natives of India, are not previously disadvantaged. While the deal will leave Amsa empowered, the inclusion of ICT, Zuma and the Guptas in the empowerment transaction has undermined real transformation in the sector, critics complain.
The Mail & Guardian has confirmed that ANC national chairperson Baleka Mbete pulled out of the deal. "I was approached with an offer to participate; I declined. The deal's structure was outside the investment philosophy and criteria of our women's group," Mbete said. She did not specify which women's group she was referring to. But it is understood that Mbete was talking to ArcelorMittal before the ICT controversy broke, and that she and her group withdrew only last week.
Earlier this year it was announced that ICT had been awarded the prospecting right to a 21% residual portion of mining rights in Sishen, which had reverted to the state in 2009. ArcelorMittal, the former owner of the rights, failed to convert them to new order rights, as required under the Mineral and Petroleum Resources Development Act.
The share was critical to a supply contract between Amsa and Kumba, whereby Amsa was entitled to more than six-million tonnes from Sishen at cost plus 3%. When the rights reverted to the state, Kumba demanded that Amsa buy iron ore at market prices. While this dispute is now subject to arbitration, it led to Amsa instituting a R600/tonne surcharge on its products.
The Department of Trade and Industry (DTI) was so incensed by the Sishen surcharge that it took the matter to the Competition Commission, which is investigating it. The surcharge, which ran between May and August this year, was halted when Kumba and Amsa came to an interim pricing agreement pending arbitration.
Rob Davies, the trade and industry minister, refused to comment on the particulars of the deal, but said the ministry intended to ensure a competitive steel price and a local manufacturing industry. The ministry also wanted to ensure that some of the iron ore from Sishen would be made available at concessionary prices for local steel manufacturing. Analysts view the Amsa deal as commercially savvy, if unpalatable.
Source: Mail & Guardian
Showing posts with label Rob Davies. Show all posts
Showing posts with label Rob Davies. Show all posts
Friday, August 13, 2010
Friday, February 5, 2010
New body to expedite empowerment
THE government is banking on the recently appointed Broad-Based Black Economic Empowerment Council to speed up implementation of its affirmative action policy. The government’s economic transformation programme has been blamed for alienating the white community, while creating new social inequalities, especially among its intended beneficiaries.
The 19-member body, which is chaired by President Jacob Zuma , was officially launched yesterday. “We want it to give advice that will lead to action,” said Trade and Industry Minister Rob Davies . With its members appointed by the president, the council is a statutory body created in terms of the Broad-Based Black Economic Empowerment Act. It replaces a black business working group that advised former president Thabo Mbeki. “The sense that we all have is that progress of BEE to date has been modest,” Davies said. He said there was a need to review the codes of good practice “to see what is wrong with them, if anything”. There was a need to conduct research on the effect of black economic empowerment to date, and also on big deals concluded so far. Standing in for Zuma, Deputy President Kgalema Motlanthe said the government could no longer tolerate the current status of BEE, which in the past 15 years had benefited a handful of individuals. “Only a few benefited again and again from the bounty of black economic empowerment,” he said. The “truly marginalised” — women, the rural poor, workers and the unemployed — were left on the sidelines.
It was important to look at BBBEE beyond business deals and shareholding in companies, to include equipping people to run their own businesses. “More must be enrolled in skills training and more should have access to arable land.” The BBBEE council includes Congress of South African Trade Unions president S’dumo Dlamini, Business Unity of SA CEO Jerry Vilakazi, and businessmen Sandile Zungu and Don Mkhwanazi. Other government officials were Economic Development Minister Ebrahim Patel, Labour Minister Membathisi Mdladlana , and Minister of Women, Children and Persons with Disabilities Noluthando Mayende-Sibiya.
The council would meet at least four times a year in plenaries. But it was expected that the bulk of the work would take place through subcommittees to be established when it convened within six weeks . Motlanthe said it was wrong to think that the government did not want black people to be wealthy, just as it was unwise to dismiss critics of black economic empowerment. “The critics must accept that the exclusion of a large section of our community from productive participation in the economic life of our society is a significant hindrance to our collective prosperity.”
Source: Business Day
The 19-member body, which is chaired by President Jacob Zuma , was officially launched yesterday. “We want it to give advice that will lead to action,” said Trade and Industry Minister Rob Davies . With its members appointed by the president, the council is a statutory body created in terms of the Broad-Based Black Economic Empowerment Act. It replaces a black business working group that advised former president Thabo Mbeki. “The sense that we all have is that progress of BEE to date has been modest,” Davies said. He said there was a need to review the codes of good practice “to see what is wrong with them, if anything”. There was a need to conduct research on the effect of black economic empowerment to date, and also on big deals concluded so far. Standing in for Zuma, Deputy President Kgalema Motlanthe said the government could no longer tolerate the current status of BEE, which in the past 15 years had benefited a handful of individuals. “Only a few benefited again and again from the bounty of black economic empowerment,” he said. The “truly marginalised” — women, the rural poor, workers and the unemployed — were left on the sidelines.
It was important to look at BBBEE beyond business deals and shareholding in companies, to include equipping people to run their own businesses. “More must be enrolled in skills training and more should have access to arable land.” The BBBEE council includes Congress of South African Trade Unions president S’dumo Dlamini, Business Unity of SA CEO Jerry Vilakazi, and businessmen Sandile Zungu and Don Mkhwanazi. Other government officials were Economic Development Minister Ebrahim Patel, Labour Minister Membathisi Mdladlana , and Minister of Women, Children and Persons with Disabilities Noluthando Mayende-Sibiya.
The council would meet at least four times a year in plenaries. But it was expected that the bulk of the work would take place through subcommittees to be established when it convened within six weeks . Motlanthe said it was wrong to think that the government did not want black people to be wealthy, just as it was unwise to dismiss critics of black economic empowerment. “The critics must accept that the exclusion of a large section of our community from productive participation in the economic life of our society is a significant hindrance to our collective prosperity.”
Source: Business Day
Monday, August 24, 2009
Nzimande rejects claim economic cluster is not black enough
South African Communist Party secretary Blade Nzimande has hit back at ANC Youth League president Julius Malema for referring to some cabinet ministers as minorities and claiming they were “not black enough”. Nzimande told a media briefing yesterday that the SACP rejected comments that President Jacob Zuma’s finance cluster was not black enough.
Malema had charged that the Zuma government had seen an increase in the power of minorities (whites, Indians and coloureds) in economic portfolios such as Finance, Trade and Industry, Economic Development, Public Enterprises and National Planning. He said blacks dominated less influential posts in the security cluster, which included the ministries of Defence, Police, Home Affairs and Intelligence. Malema’s charge put the spotlight on Economic Development Minister Ebrahim Patel, Trade and Industry Minister Rob Davies, National Planning Minister Trevor Manuel, Finance Minister Pravin Gordhan, Public Enterprises Minister Barbara Hogan and the newly appointed Reserve Bank governor Gill Marcus.
Nzimande said the SACP central committee, which met at the weekend, “affirmed our party’s full confidence in and support for our comrades in the cabinet, including those in key economic portfolios”. He called on the ruling tripartite alliance, which includes the ANC and Cosatu, to root out “narrow African chauvinism” within their structures. “We are pleased to note the robust defence of the core non- racial principles of our movement by senior ANC leaders, and their forthright rejection of any opportunistic attempt to play an ethnic card. “While ugly white chauvinistic attitudes persist in many places, sometimes brazenly and sometimes subliminally, and should be fought at all times – a counter, narrow Africanist chauvinism simply reproduces and feeds its counterpart. “Such trends must be nipped in the bud as they have been throughout the history of the ANC.”
Last week the Youth League said it “reaffirms its position on the principle of African leadership, particularly on key economic cluster responsibilities”. “We have never said we doubt the capabilities of the incumbent leaders . “The principle we wish to reaffirm amid the misinterpretations is that African leadership should not be compromised when future appointments are made, as that could play into a racist perception that Africans are incapable to perform key economic roles in the government and corporate sector.”
Source: The Sowetan
Malema had charged that the Zuma government had seen an increase in the power of minorities (whites, Indians and coloureds) in economic portfolios such as Finance, Trade and Industry, Economic Development, Public Enterprises and National Planning. He said blacks dominated less influential posts in the security cluster, which included the ministries of Defence, Police, Home Affairs and Intelligence. Malema’s charge put the spotlight on Economic Development Minister Ebrahim Patel, Trade and Industry Minister Rob Davies, National Planning Minister Trevor Manuel, Finance Minister Pravin Gordhan, Public Enterprises Minister Barbara Hogan and the newly appointed Reserve Bank governor Gill Marcus.
Nzimande said the SACP central committee, which met at the weekend, “affirmed our party’s full confidence in and support for our comrades in the cabinet, including those in key economic portfolios”. He called on the ruling tripartite alliance, which includes the ANC and Cosatu, to root out “narrow African chauvinism” within their structures. “We are pleased to note the robust defence of the core non- racial principles of our movement by senior ANC leaders, and their forthright rejection of any opportunistic attempt to play an ethnic card. “While ugly white chauvinistic attitudes persist in many places, sometimes brazenly and sometimes subliminally, and should be fought at all times – a counter, narrow Africanist chauvinism simply reproduces and feeds its counterpart. “Such trends must be nipped in the bud as they have been throughout the history of the ANC.”
Last week the Youth League said it “reaffirms its position on the principle of African leadership, particularly on key economic cluster responsibilities”. “We have never said we doubt the capabilities of the incumbent leaders . “The principle we wish to reaffirm amid the misinterpretations is that African leadership should not be compromised when future appointments are made, as that could play into a racist perception that Africans are incapable to perform key economic roles in the government and corporate sector.”
Source: The Sowetan
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