[miningmx.com] — TWELVE years ago the state appointed a
consortium led by Adonis Pouroulis, who was relatively unknown at the time, as the
contractor to mine Alexkor. Pouroulis’s brief was simple: prepare the loss-making,
Government-owned diamond producer to be profitable in order to be privatised.
At the time, Alexkor’s yearly output averaged around 100,000 carats, and Pouroulis
indicated his AIM-listed Petra Diamonds would’ve been keen to snap up Alexkor’s
controlling stake if given the chance. But Government’s initial plans to privatise
Alexkor came to naught in a series of well-documented events, preceded by
an acrimonious split between Pouroulis and the company.
A comparison between the current fortunes of Petra Diamonds and Alexkor makes for
interesting reading.
As for Pouroulis and Petra, they survived an unsuccessful foray into Angola prior to
Petra’s transformation as one of the world’s foremost up-and-coming diamond
producers, succeeding in adding value to quality assets that they had picked up
along the way from majors like De Beers. On Wednesday, it had a market
capitalisation of £601m (around R7.5bn).
By comparison, Alexkor only recently posted its first operating profit in five years –
R11.3m. Diamond production has declined to about 38,000 carats, while the number
of people in its employ dwindled to 105, from 669 in 2000.
This is why it makes one wonder if our government is again throwing good
money at a bad cause to hear that Alexkor is now shopping for new assets, not only
in South Africa but also in the diamond hotspots of Angola, Zimbabwe and the
Democratic Republic of Congo.
Miningmx was not invited to a press conference on Monday where Alexkor’s
new CEO, Benro Lategan, and Chairman Reginald Muzariri lifted the lid on its new
strategy, so we trust that the good journalists of Business Day had the
following facts straight:
Alexkor is looking for between R200m and R250m for its new ventures, to be partly
funded from taxpayers’ money, and it sees its mandate to be developmental in
nature, creating jobs and side-stream ventures for beneficiation. It was conducting
due-diligence studies on four or five opportunities outside Alexander Bay.
Also, Alexander Bay would be run by an independent management team, reporting to
a board consisting of Alexkor and Richtersveld community representatives. This
venture alone has received R200m from Alexkor’s shareholder, the Department of
Public Enterprises, to fund exploration.
Miningmx attempted get hold of Lategan on Tuesday, not only to confirm
these facts but also to elaborate on the details of the strategy, but we were told he
was no longer accepting queries from the media. It’s a pity, because we would’ve
liked to ask him the following questions:
– Is Alexander Bay being managed at the site, or from Alexkor’s corporate office in
Rosebank?
– Does this asset have enough diamond resources left to be worth the attempt to
restore it to some semblance of what it used to be?
– Can he elaborate on the new management team’s experience in exploration?
– What does he make of the experiences of many others – including Petra, BHP
Billiton and Trans Hex – who have previously burnt their fingers in Angola and the
DRC?
– How far will R250m go in the exploration of four or five projects?
– How will his performance and that of his team be monitored, and have they been
given clear targets?
It seems the renewed emphasis on Alexkor stems from government’s stated intention
to extend its operational reach in the mining industry.
Also, in his State Of The Nation address delivered in February, President Jacob Zuma
specifically earmarked the diamond industry as central to the government’s
beneficiation strategy.
In June, Deputy Minister of Mineral Resources Godfrey Oliphant said local small-scale
beneficiators were struggling for access to a steady supply of rough diamonds,
and that Alexkor would be part of a long-term solution to this problem.
Surely the money that was earmarked for Alexkor would be put to far better use in
sorting out the mess that was previously created at the State Diamond Trader? That
would bring far more immediate benefits in terms of getting diamonds to local and
small-scale beneficiators.
