Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : SOUTHERNERA (t.SUF) -- Ignore unavailable to you. Want to Upgrade?

To: russet who wrote (2874)	4/13/1999 11:57:00 PM
From: russet	Respond to of 7235

Then again gemsearcher, If this article gets read by the black elite in SAf, and taken to heart,....there may be hope yet. 20 October 1998 Canada's mining policy could save SA time South Africans would do well to study the Canadian mining exploration experience before responding to the publication of our own minerals and mining bill, writes finance editor Dave Marrs WHITE South Africans and the mining houses they control currently hold the rights to the mineral wealth under two thirds or more of the country's "geologically attractive" land area. The rest is largely accounted for by the state, including former homeland areas and land held in trust for various tribes. The African National Congress (ANC) government is determined that this obvious imbalance should be rectified. However rather than move rapidly towards increased black ownership of mineral rights, a succession of policy papers leading up to today's white paper have proposed that the current system of private ownership be replaced by total state control. At first glance, the effective nationalisation of privately owned assets sits uncomfortably with an ANC government that is publicly committed to privatisation and the market economy. However it is the apparent contradiction that should prompt pause for thought by those inclined to knee-jerk opposition. It is also where SA could take advice from Canada. The two countries' colonial histories, extensive land and varied mineral and metal resources, make comparisons meaningful and it could save SA much time and conflict. The proposed new minerals and mining law is expected to allow existing SA operations to continue on a "use-it-and-keep-it" basis and take into account some of the concerns of the mining houses by providing for the retention of rights to a reserve - without minimum work and investment requirements - under special circumstances. These could include cases where exploitation is considered uneconomical due to prevailing commodity prices or where new production could lead to market disruption that is considered contrary to the national interest. The bill is also expected to outline the manner in which licences to prospect and mine will be granted once ownership lies with the state. The established mining houses, among others, have argued that absolute security of tenure is essential and that the value investors currently place on companies such as Amplats and Anglogold includes their "blue sky" potential, which is inextricably tied to ownership of mineral reserves. However if we are serious as a nation about overcoming the injustices of apartheid and providing equal opportunities for all, job creation and small business development must be priorities. In a country with such a wide array of resources it makes sense to encourage exploration and exploitation on any sustainable scale. The potential for mining job creation is severely restricted under the current system, which allows the owners of mineral rights to keep exploration results secret for long periods and delay mining proved deposits for decades. The hoarding of mineral rights is recognised the world over as an impediment to investors. Indeed, only a handful of active junior mining companies are based in SA and their prospecting and exploration activities take place largely elsewhere in the region. By comparison, Canada's mineral rights policy has historically excluded private ownership and the country leads the world in mining exploration both at home and in previously underexploited parts of the world such as Latin America, South East Asia and much of Africa. A bull market for Canadian exploration began at the start of the decade and has survived last year's Bre-X debacle in Indonesia, which cost investors more than C$6bn, relatively unscathed. According to Prospectors and Developers Association of Canada figures, Canadian "junior" mining companies have increased their exploration spending from C$64m in 1991 to an estimated C$715m last year and C$774m for the first eight months of this year. This amounts to about half of global junior exploration spending and more than 10% of all exploration expenditure, including that of the dominant US, UK and SA-based senior mining houses. The result has been an explosion of resource discoveries by Canadian juniors, such as the spectacular Voisey's Bay nickel deposit and the Ekati and Diavik diamond mines in the Northwest Territories among others, some in areas already explored and passed over by senior mining houses. Junior mining companies are defined as those that undertake high-risk exploration and mine development activities using funds raised in the equity markets specifically for that purpose. Testimony to the stimulatory effects of a free mineral-rights policy is the fact that there are up to 1 100 organisations fitting that description in Canada, 300-400 of which were last year actively staking claims around the world and approaching the country's equity markets for funding. Canadian juniors stand out as uncommonly bold in a country that does 80% of its trade with the US and therefore has little motivation to risk venturing further afield. Only 28% of junior exploration money was spent in Canada last year, compared with 60% at the beginning of the decade. Africa's share has leapt from zero to almost 20% in that time. It should come as no surprise then that SA's most recent mineral-rights dispute involved a Canadian junior mining company, SouthernEra and the imposing De Beers group. While their tussle over the Marsfontein farm in the Northern Province has since been settled by a compromise joint venture, it is worth noting SouthernEra's indignation when a group claiming to be the heirs to the farm's mineral rights surfaced after the Canadian company had struck a prospecting deal with Randgold. In Canada and most other parts of the world benefiting from the boom in mining exploration over the past decade, including the Latin American region, there would have been no contest. Since all mineral rights lie with the state, SouthernEra and its partners would have been in the pound seat as licensed prospector and staker of the claim. It is also highly likely that if the proposed new SA minerals policy was law at the beginning of the year, neither the heirs to the mineral rights nor De Beers would have been able to lay claim to Marsfontein's diamonds. SA can also look to Canada when the time comes to implement the change from private to state ownership of mineral rights. While most of the country's land area has long been open to adventurers prepared to borrow the money and brave harsh weather conditions in the hope of striking it lucky, the present province of Newfoundland is the exception. Like many of Canada's other provinces, Newfoundland was established as a colony, retaining that relationship with Britain until incorporation into the Canadian federation in 1949. Unlike the other provinces, the colony had a system of private mineral rights ownership that blocked public access to the third of its land area with the most mining potential. The SA minerals and mining bill is expected to contain some sort of tax on existing mineral rights as a means of gradually transferring ownership to the state. Of particular interest then, is the way in which an escalating taxation system was applied in Newfoundland to discourage speculation in mineral rights and promote a "use-it-or-lose-it" policy. Private control of mineral rights was rapidly reduced to less than 5% of the province's land area, largely those parts with proved reserves that could be exploited to justify the cost of ownership. The rest reverted to the state and became available to individual prospectors and junior mining companies which went on to drive the Canadian minerals exploration and mining boom that has underpinned the country's economic success. russett, still a bull with Suf, but I like that South American stuff.