A deal with Coal India this week has revealed that the
Limpopo government is investing heavily in the mining industry – ahead of final
discussions on nationalisation by the ANC at the end of January.
It was revealed this week that Limpopo’s own state-owned
mining company, Corridor Mineral Resources (CMR) - a wholly-owned subsidiary of
Limpopo Economic Development Enterprise – has entered into a massive joint
venture with Coal India to develop new coal mines in the province.
Five Limpopo departments were recently placed under national
government administration and the fiscus is unable to pay its service
providers.
The Indian mining deal was put together over the past two
years with Premier Cassel Mathale leading the charge, holding several
high-level talks with the Indians.
Mathale said the investment would boost job creation in
Limpopo.
But commentators say the deals expose the practical
contradictions of a state role in mining, especially on water utilisation,
which is a huge issue in the province.
Mathale is an outspoken supporter of the nationalisation of
the mines, and previously spoke in support of ANC Youth League leader Julius
Malema’s pro-nationalisation demands.
“We have always believed that the mineral wealth beneath our
soil is the national heritage of our people.
"They must enjoy direct benefit of all mining proceeds,”
Mathale said at the ANC’s Limpopo conference in December.
Coal India has reportedly put together a war chest of about
R9bn for new investments.
The company produces 80% of India’s coal, and is under
pressure to deliver coal to feed 20 new coal-fired power stations being built
in India.
Trade and Investment Limpopo chief executive Motalane
Monakedi, involved in setting up the deal, said CMR was already sniffing around
potential licence holders, because it had no coal prospecting licences.
New coal mines in Limpopo have a big problem: water. There
simply is not enough to go around, rendering many of the licences useless.
Monakedi was not deterred by the looming environmental
problems.
“We are actively looking for people with prospecting rights
to invest in the joint venture,” he said. “We have got one interested
investor.”
He confirmed the Soutpansberg was one of the areas the joint
venture was investigating.
Most greenfield coal reserves are in the Soutpansberg, which
has the rainfall of the Kalahari.
Most of the Soutpansberg’s coal licences had been allocated,
but it is simply not feasible to mine as Coal of Africa’s startup mine Makhado
found out.
Coal of Africa’s Vele mine gets most of its water from the
already overcommitted Limpopo River.
Mining and prospecting licence holders could make a killing
if their rights were bought out by the Limpopo-Coal India venture. To acquire a
prospecting licence is free, except for the registration fee of R500.
“This could potentially end in a killing for the current
rights holder,” said Koos Pretorius, director of the Federation for a
Sustainable Environment.
“There is no water in the Soutpansberg to mine the coal
with. If you want water to mine you will have to take away water from the
current users,” he said.
Pretorius cautioned that even without CMR sticking its nose
into the Soutpansberg, a huge fight was looming over the water rights.
“You can imagine what will happen if a private mine’s water
licences is rejected, and the state-owned mining company applies and it is
granted.
"It is a clear conflict of interest,” he said. “It simply
can’t work.”
Monakedi said Limpopo’s state mining company CMR was drawn
into the fray because Coal India wanted to partner with a mining company owned
by the government.
According to its mandate, CMR must develop mining assets and
focus on mining and mining-related activities. Two years ago its interests were
still small and mostly centred on chrome and platinum mines.
In 2010 it took a sudden interest in coal mining, when
Mathale lined up the Chinese for a deal with CMR.
CMR signed a memorandum of understanding with
representatives of the China Coal Technology and Engineering Group and the Universities of Limpopo and Venda, also to develop coal mines for the Chinese.
It is unclear what the status of this deal is.
- City Press