iHub Mining Sector Entrance Lobby

[Frank Pembleton]

S.Africa mines absorb charter, stocks pare losses
Reuters, 10.10.02, 6:09 AM ET
By Sue Thomas

JOHANNESBURG, Oct 10 (Reuters) - Mining shares moved off early Thursday lows as investors absorbed South African plans to give blacks a greater stake in the country's mineral wealth, but weak global markets limited their gains.

Most of the mining firms with big stakes in South Africa and analysts welcomed a new mining charter, released on Wednesday, while Anglo American has yet to respond.

Anglo American, South Africa's largest company, shed 3.2 percent to 126.50 rand, but by 0925 GMT it had pared some of its losses and was 2.3 percent lower at 127.70 rand.

Anglo share was hard hit when a first draft of the charter was leaked in July, which scared investors with suggestions that 30 percent of mining assets and 51 percent of all new projects be sold to black businesses with 10 years.

At the 126.50 rand low hit on Thursday morning, Anglo was 41 percent below its life high hit in February this year, and 16 percent below its levels immediately before the July leak.

The final version of the charter, worked out between the industry, government and unions, says 15 percent of the country's mining assets must be in black hands within five years and 26 percent within 10 years.

"I'm still going through it, but it's not as bad as we initially thought. The 26 percent sounds bad, but if you read the detail there are a lot of concessions to the mining industry," said one analyst.

The world's largest diversified miner, BHP Billiton, said it supported the new charter's aims.

"Overall, we support the charter and confirm our willingness in negotiations for any transactions going forward," said Michael Campbell, BHP Billiton's spokesman in South Africa. "The effectiveness will depend on the specifics in implementing the process."



POSITIVE REACTION

BHP Billiton lost 1.5 percent to 46.80 rand in early trade in Johannesburg, but came back into positive territory. By 0930 GMT it was 0.5 percent down at 47.25 rand. In London, the firm was down 0.8 percent at 288 pence.

AngloGold, South Africa's largest gold producer, said the targets, particularly 15 percent in five years, were achievable.

AngloGold's share extended its gains after the company's reaction, adding 3.9 percent or 19.80 rand to 530 rand.

Smaller peer Harmony Gold threw its support behind the charter, and said it was well positioned to meet the conditions of the charter ahead of the targeted dates.

Analysts said the charter offered certainty after months of investor jitters, but said weak global markets had conspired to cap mining stocks' gains on positive reaction to the charter.

"I think the charter is good ... but from a market perspective it's difficult to tell because of weak equity markets ... It's difficult to attach or to quantify the effect in the market this morning," said Rice Rinaldi analyst Allan Cooke.

"I think the certainty that the final copy lends to the market is a positive, but there are still many question marks, including weak market sentiment and the U.S.-Iraq situation, and many other negatives that will have an impact," he added.

South Africa's second largest gold producer, Gold Fields, Anglo American Platinum, and London-listed minerals and mining firm Xstrata have yet to respond.

"We're busy studying the document, and will respond towards the end of the day," said Mike Mtakati, a spokesman for Angloplat, the world's largest platinum producer. (Additional reporting by James Regan in Sydney)

http://www.forbes.com/newswire/2002/10/10/rtr746748.html