Even the most cursory glance and briefest of considerations of comments from Chris Griffith, CEO of the world’s largest platinum miner, should spark deep concern within the government.
Griffith, the head of Anglo American Platinum (Amplats), spoke of electricity costs going up to R1bn a year within the next three years as Eskom implements its new tariffs, while the carbon tax that kicks in from June will add another R300m to its costs.
That’s just one company, albeit a large one that uses a lot of power, 550MW, but by the same token it employs 25,000 people.
While Amplats is at the lower end of SA’s platinum industry’s cost curve and the industry has finally moved back to profit with higher metal prices, there is no chance a number of the recently unprofitable mines will withstand cost increases of this magnitude.
The mining industry has already absorbed a 523% increase in electricity prices since 2006 and the results are clear. The mining sector has bled jobs over the past decade, with about 54,000 jobs lost.
Even for Amplats, where does it find another R1.3bn to pay for a crisis not of its making?
When a CEO of a company the size and importance of Amplats delivers an unequivocal message of “don’t do it” on implementing what is perceived to be an unnecessary carbon tax, then someone in the government would do well to listen.
The numbers when it comes to additional costs that Eskom is imposing on the country combined with the carbon tax are scary. More scary will be the effect on unemployment which it seems this government does not have an answer to address. If it doesn’t have an answer it might do a bit more listening and a little less rhetoric.
A changing of the guard at GPI?
Can we expect a changing of the guard at gaming and restaurant group Grand Parade Investments (GPI)?
The executive chair and founder, Hassen Adams, significantly reduced his interest when he sold 20-million of his total 63-million shares for R60m last week. This move, effectively reducing his holding from 13.47% to about 9.35%.
The disposal saw Adams become the third-largest shareholder after Chandos Trust, which is aligned to former banker GT Ferreira and has a holding of 9.94%, and Value Capital Partners (VCP), which initially held a 16.42% stake.
Nocone said it out loud, but it looks like Adams unloaded his shares to VCP. A day after he reduced his holding, the investment firm said it had increased its holding to 20.88%.
Having VCP, which was founded by private equity firm Brait’s Anthony Ball and Sam Sithole, involved in the group could be a game changer for GPI. The Cape-based empowerment group has struggled to get its quick-food operations to work, so having people with a background in turning around troubled business could just be what it needs.
Investors seem to like the idea of VCP increasing its shareholding, as GPI’s share price has risen 15% to R3 a share since news broke on Tuesday last week that Adams had reduced his stake.
Having VCP as a shareholder is welcome news after the torrid year it has had. Adams has come in for some sharp criticism for his management of the group by some minority investors, so having a new party involved could placate these shareholders.
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