South Africa: President Jacob Zuma launches South Africa’s state-owned mining company

south africa miningBy Nangayi Guyson in Kampala Uganda – Cape Town – President Jacob Zuma of South Africa has launched a state-owned mining company to ensure more state involvement in the vital sector of the economy.

The African Exploration Mining and Finance Corporation (AEMFC), currently a subsidiary of the Central Energy Fund, would serve as the state-run mining firm, under which all state interests in mining would be consolidated, Zuma said

“The role of the state cannot merely be confined to that of a regulator. The state must actively participate in the mining industry to ensure that our national interest is protected and advanced,” Zuma said.

“Government policy on minerals and mining does not make provision for the nationalization of mining assets, but it does not prevent the state from participating actively in mining, competing with other companies.”

Some within Zuma’s ruling African National Congress party have called for nationalisation of mines, although experts believe that the establishment of a state mining firm will be the limit of the government’s involvement in the sector.

The government has said it wants the AEMFC to  focus on strategic minerals like coal and uranium to make sure of sufficient supplies to its power plants, as the country depends on coal for 95 percent of its power supplies to homes across South Africa, along with operating Africa’s only nuclear energy plant.

The state owned  miner African Exploration Mining and Finance Corporation (AEMFC) on Saturday used the sod-turning ceremony of its Vlakfontein coal mine to lift the veil on some of its future projects, which would include an oil-from-coal operation. AEMFC, currently part of the Central Energy Fund (CEF), was in November indicated by cabinet to become the nucleus of the state’s participation in the mining industry. It would in future operate as a stand-alone entity. Speaking at the sod-turning ceremony, President Jacob Zuma said the state could no longer be confined to the role of a regulator. “The state must actively participate in the mining industry to ensure that our national interest is protected and advanced,” said Zuma. “Government policy on minerals and mining does not make provision for the nationalisation of mining assets, but it does not prevent the state from participating actively in mining, competing with other companies.” The open pit Vlakfontein mine, located close to Ogies in Mpumalanga, would start operations in June.

According to AEMFC CEO,Sizwe Madondo, the group’s management is still engaged in coal supply negotiations with Eskom. The power utility’s Kendal station is within view from the mining premises. Madondo said capital expenditure on the project would amount to R130m, financed by the CEF. Construction work has been outsourced to Concor, a subsidiary of Murray & Roberts. The mine has total reserves of 33 million tonnes, and would initially produce 800,000 tonnes per year increasing to 1,6 million tonnes, depending on demand. The coal would have calorific values of between 19 and 22. Between 150 and 200 people would be employed during the mine construction phase, and 120 once mining operations began.