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Send  Share  RSS  Twitter  20 Aug 2010

MINING: SA Goverment Cautioned on Lonmin Rights Snatch

 





Recent Gauteng Business News

The Unit for Risk Analysis (URA) at the South African Institute for Race Relations has
warned that the Department of Minerals and Energy was damaging the reputation
of South Africa as an investment destination. The warning came after the Department
of Mineral Resources (DMR) last night issued a letter to Lonmin ordering the
mining company to cease selling non-platinum metals extracted from its mines with
immediate effect. Non-platinum metals are extracted in the same process as
extracting ‘platinum group metals’ and contribute significant revenue to platinum
miners.

Media reports suggest that the letter may be closely linked to a mining rights bid by
a company called HolGoun. HolGoun has been awarded a prospecting right on property
owned by Lonmin. According to reports in Business Day, HolGoun is closely
linked to the African National Congress and to a former director general of public
enterprises.

The URA’s Frans Cronje said that the order appeared to have many similarities to
the recent Kumba/Imperial Crown Trading rights debacle, which also saw a start up
mining company closely linked to the ANC snatch a prospecting right from under the
nose of an established mining company.

Cronje said that mining companies and other industrial investors could not be expected
to commit new fixed investment to South Africa if they were not certain that
they would enjoy business rights for long enough to see a return on their investment.

Cronje urged South Africa’s Government to “read how this latest infringement
is reported in the Financial Times in London this morning and understand the great
damage that is being caused to investor sentiment on our country. Attracting increased
levels of fixed foreign investment is absolutely critical if South Africa is going
to have any chance of assuming the growth rates necessary to make sufficient inroads
into levels of poverty and unemployment. The letter that the DMR issued last

night will directly compromise the ability of our country to reach those growth levels”.


 
 
 
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