The Asia Miner

OCT-DEC 2015

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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October-December 2015 | ASIA Miner | 59 Chinese Investment Abroad EASTERN Platinum Limited (Eastplats) has reached an agreement in principal with Hebei Zhongbo Platinum Co Limited (HZP) to re- structure the transaction whereby HZP is to acquire the company's entire South African platinum group metal (PGM) business and all investments and loan agreements it has with subsidiary companies. In June the parties agreed to proceed to complete the purchase and sale of the Crocodile River Mine and associated inter-corporate loans for US$85 million, payable in cash on closing which was es- timated to occur on or before August 7. However, on August 10 Eastplats that the proposed restructuring of the transaction continued to remain subject to execution of de- fnitive agreements and the receipt of all necessary South African regulatory approvals. As such, Eastplats determined it to be prudent to extend the fnal date under the original agreements with HZP until December 31, 2015. This is the date following which either party may elect to terminate the agreements without recourse. The Crocodile River Mine is on the western limb of the Bushveld Complex, near the town of Brits in South Africa's North West Prov- ince. The Maroelabult section was previously operated successfully as an open pit mine but both Maroelabult and Zandfontein are now underground operations. A combination of the rising Rand exchange rate and the contrac- tors' inability to mine the operation effciently using highly mech- anized mining methods underground resulted in the mine being placed on care and maintenance in December 2003. The mine was re-opened in 2004 and has since undergone extensive de- velopment and refurbishment of surface facilities. However, in June 2013, due to continuing negative outlook in the global economic environment, the sustained weakness in PGM pricing and the op- erating environment in South Africa, Eastplats decided to suspend funding for the Crocodile River Mine. The project comprises four mining sections - Maroelabult in the east, Zandfontein in the centre, Crocette in the west, and Kareespruit (to be developed) between Maroelabult and Zandfontein. Restructuring of the HGZ transaction was determined to be in the best interests of the company and HZP as the manner to best address timing issues with respect to various submissions on a regional asset basis that are required for regulatory approvals. The sale of the balance of the company's remaining PGM busi- ness (the Spitzkop, Kennedy's Vale and Mareesburg projects and inter-corporate loans) continues for total consideration of US$140 million. DEMOCRATIC Republic of Congo (DRC) President Joseph Kabila recently visited China to review the status of Sino-Congo- lese projects and discuss ways to strength- en and enhance relations between the two. The DRC has benefted greatly in the past 25 years from Chinese investment in infra- structure and mining. In recent years Chinese investment in the DRC as well as Congolese exports to China have grown rapidly. A recent RAND Corpo- ration report concluded that bilateral trade between the DRC and China accounts for approximately 2% of total Sino-African trade. In 2008, the Chinese government entered into a contract with the DRC government for US$6 billion worth of infrastructure projects - from roads and railways to the construc- tion of hospitals, health centres and univer- sities in exchange for China's participation in DRC's mining investments. In addition to contributing to the DRC's infrastructure capabilities, which in turn pro- vide new opportunities to other foreign part- ners, the Sino-Congolese ventures have created thousands of jobs for the Congo- lese people, generated tax revenues for the DRC and provided a critical knowledge transfer between the two countries. Mining has played an important role in the DRC's development and China has contrib- uted greatly. At the end of 2014 there were 14 joint Sino-Congolese mining projects under way, primarily in copper but also oth- er minerals. These projects employ thousands of Con- golese, source local and regional equip- ment, develop miles of new roads and promote further development throughout the country. The total initial pledge towards these projects has been US$3.72 billion, including $320 million for a hydro-electric power plant. The total spent in this feld in 2014 alone was US$1.037 billion. A major joint venture operator in mining is Sicomines Corporation which at the end of 2014 had spent US$1.5 billion since its in- ception. Total Chinese labour employed is 1479 and total Congolese labour is 11,057. Between 2008 and 2014 China invested in 10 infrastructure projects in the DRC, in- cluding roads, railways and health facilities. In 2015 estimated Chinese expenditure on public arenas, roads, solar projects and other infrastructure is US$250 million. Trade between the two has also been increasing. In 1991 there was US$68.34 million in trade with only $5.08 million worth of imports to China from the DRC, in 2003 there was $51.71 million in trade with imports to China worth $26.3 million and in 2014 there was $4.185 billion in trade with imports to China worth $2.823 billion. Eastplats selling South African PGM assets Democratic Republic of Congo President Joseph Kabila arrives in Beijing, China. Strong ties between DRC and China

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