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Anglo’s vow to spend R6bn is great, but how much is new?



Anglo’s vow to spend R6bn is great, but how much is new?

Fabulous numbers told a good story about Anglo staying in SA, but some would have been spent anyway

Allan Seccombe

The headline-grabbing numbers at President Cyril Ramaphosa’s investment conference all looked spectacular and gave his presidency a ringing endorsement. But some of the investment numbers are not new, while others are a factor of doing business.
Anglo American’s $6bn commitment, for example, comprises a $2bn investment in going underground at its depleted Venetia opencast mine in Limpopo. This is a project that started in 2013.
What the rest will be is not clear, but Anglo says it will be invested in a fairly even spread over the next five years and will go towards sustaining capital – which is the money invested to keep the mines running and hardly a new investment – and life extension capital, which is money needed to prolong the duration of mining by exploration and converting resources to reserves, a necessary part of mining.
To call this new investment is not entirely accurate, but to be fair Anglo CEO Mark Cutifani was towards the end of 2017 warning that if there was no favourable outcome to the hotly contested third iteration of the Mining Charter released by then-mineral resources minister Mosebenzi Zwane, and if Zuma and his faction remained in power, the multinational resources group would have to closely reconsider its investments in SA.
Vedanta, an Indian resources company, is a keen investor in SA, having bought zinc assets from Anglo in 2011 and attracting $400m investment in the Gamsberg mining project, which started in 2015. It is looking at an expansion project that would cost $700m and include a smelter and refinery.
Purely on the mining front, the two biggest investment numbers from the two biggest companies help tell a good story but they’re not entirely new.

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