Will S Africa buy more stake in PGM (Platinum Group Metals) mines?

JOHANNESBURG (Commodity Online): Will South Africa increase its stake in platinum group metals (PGM) industry following a green signal from an advisory body?

A totally black-owned company KIO Advisory Services recently said that the country should raise its involvement in the PGM industry in order to achieve transformation.

And, if that happens, there is a chance of big changes in South Africa's mining sector. Even gold, and platinum and other precious metals' prices may also see some changes following this.

The KIO report rejected the view of the South African Communist Party that state ownership in mining is a ploy to bail out black economic empowerment shareholders.

The report echoes the views of controversial ANC Youth League president Julius Malema, who has been calling for the nationalisation of mines, although this has been rejected by President Jacob Zuma.

KIO says that where transformation has taken place in the platinum producing segment, this has not been at the holding level but rather at the operations level, thus curtailing the extent and pace of transformation across the sector.

The report said there is a need for a national and sectorally co-ordinated dialogue about the development of a robust industrial strategy that will set the country on a path of sustainable and equitable economic growth.

The report is the first in a series that will assess the extent of transformation in South Africa's mining sector, specifically with regards to black ownership in mining five years after the release of the mining sector charter and promulgation of the Mining and Petroleum Resources Development Act of 2002.

KIO research project manager Lebogang Mokwena said the charter target for 2009 was 15 percent. But according to her organisation's calculations based on gross market capitalisation, attributable black ownership amounted to only 7.95 percent. This was dramatically reduced to 2.79 percent if Royal Bafokeng's unencumbered equity shareholding of 13.4 percent in Impala Platinum were to be removed.