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AEMFC is new hope for BEE mine firms

Black economic empowerment (BEE) companies that own prospecting rights can benefit from getting into business with relaunched state-owned mining company African Exploration Mining and Finance Corporation (AEMFC).

The AEMFC is not only the government’s solution to securing coal supplies for Eskom, which has been struggling to meet the country’s growing power demands, but also to maintaining its interest in strategic minerals including coal, uranium and limestone.

During the launch of the AEMFC’s Vlakfontein coal operation in Mpumalanga at the weekend, President Jacob Zuma said the role of the state could not simply be to enforce regulation, but it needed to be actively involved in the mining industry to ensure that its interests were advanced.

South Africa was crippled by load shedding in 2008 as a result of power shortages.

Chief executive Sizwe Madondo said: “BEE companies own many prospecting rights which are a challenging issue at the moment. We can come in and spend money while taking equity in the companies.” He also spoke of plans by the company to branch out of its initial plan for strategic minerals by extending its interest into platinum group metals. “We are starting with strategic minerals. We are looking at beneficiation options.”

The company has applied for mineral rights in all the provinces and is eyeing expansion to the rest of Africa.

“We were granted 27 mineral rights, we applied for 128 and are still awaiting the Department of Mineral Resources (DMR) to confirm whether they will grant the rights.”

The AEMFC is concentrating on the Vlakfontein project and the T-Project in Mpumalanga. The latter will produce crude oil from coal and will employ 1 000 workers.

He said he was confident that the operation would supply Eskom power stations. The project was expected to commence production in June and would have an initial annual output of 800 000 tons with production increasing to 1.68 million tons a year.

Capital expenditure of R130 million was injected into the project and would be used to build the crushing and screening plant, pollution control measures, power supply and other surface infrastructure.

Mining at the plant is expected to continue for about 15 years and between 150 and 200 people will be employed during the construction phase, while 120 will be employed during the operational phase.

The company was granted a prospecting right in 2006 to explore the Vlakfontein project area and the mining right was granted last August.

Capital expenditure for the T-Project will be R2 billion, the company has submitted an environmental management plan and is awaiting comment from the DMR. Operations at the T-Project are expected to commence in 2013.

The AEMFC is still owned by the Central Energy Fund.

Energy Minister Dipuo Peters and Mineral Resources Minister Susan Shabangu attended the launch. - Business Report

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