Xstrata SA ops 'fully empowered'

"The transaction will complete the facilitation of meaningful black participation in Xstrata's South African operations, according to the ownership provisions of the Mineral and Petroleum Resources Development Act of 2002," says Xstrata.

The Bakwena Ba Mogopa Traditional Community has agreed to purchase a 26% stake in the company through a pooling and sharing venture, where the community contributes the surface rights that the ore body lies under.

Xstrata also previously paid a royalty to the community.

Xstrata says that the community will immediately obtain attributable cash flows for its interest in the project in return for it funding its portion of operating and capital expenditure.

"We are pleased that the community is now a material shareholder in this business, and that we have an opportunity to participate jointly with Xstrata in developing the asset to the benefit of both participants," said Chief MC Mathibedi of the Bakwena Ba Mogopa in a statement on Tuesday.

'Don't expect major issues'

Xstrata will vendor-finance part of the community's acquisition of its interest and has guaranteed a minimum cash distribution prior to its debt obligations.

"We believe Xstrata now has in place or has already executed firm plans to reach 26% black empowerment in each of its SA businesses," said Simon Toyne of Numis in London.

"New order mining licences are yet to be received but we do not expect any major issues."

Xstrata's empowerment on its other assets include its Chrome partnership with Merafe, its Motololo empowerment deal announced in February 2006 and its coal partnership with African Rainbow Minerals also announced last February.

The Bakwena Ba Mogopa Traditional Community is also African Platinum's empowerment partner on the Leeuwkop project in the same area.