Mmakau takes stake in Shaft Sinkers

empowerment company mmakau mining, chaired by bridgette radebe, has bought a 26% stake in mining contracting company shaft sinkers in a r32,5m transaction .

through the deal, shaft sinkers, which has an annual turnover of about r700m and employs 2368 people, will have complied with the empowerment equity ownership aspect of the mining charter. it may give the company an advantage over its competitors.

peet nel, md of shaft sinkers, said the deal was carried out at a "market-related price" via some vendor finance, but no specifics were given.

mining companies are increasingly keen to work with black economic empowerment companies as they move to meet the empowerment obligations of the mining scorecard. the scorecard demands that mining companies fulfil a broad spectrum of empowerment criteria. procurement is one of them.

through selling a 26% stake to mmakau, shaft sinkers will be viewed as a black empowerment company under the equity holding stipulation of the charter. the charter states that in five years' time either 10% of the equity of a mining company, or a given project, or the equivalent value of the production of the project has to be controlled by black investors. and in 10 years' time this has to be 26%.

nel said the company advised amco investments, its guernsey-based parent company, which holds a 51% stake in shaft sinkers, that it would be best to sell a 26% stake "up front".

"one of the motivations (for buying a 26% stake now) was that mmakau might not be available in two to three years' time," said nel.

shaft sinkers is working on a number of contracts worth more than r750m. among these are contracts for the sinking and equipping of lonmin's saffy and hossy shafts in britz.

yesterday's transaction is novel in that it is one of the first deals where an empowerment company has joined with a mining contracting company that offers all the skill and technical expertise involved in building a mine, from shaft sinking to providing miners to mine the operations.

"this acquisition is the next most logical step in the growth and diversification of mmakau; more importantly, it signals the first successful penetration of a black-owned company into the shaftsinking field and is further evidence of the efficacy of both the spirit and intent of the mining charter," said radebe yesterday. mmakua, which radebe set up 15 years ago, has a long track record in the mining contracting business. in the past few years the company has grown through a series of transactions, for example its 10% stake in impala platinum's marula platinum (implats) project.

the company also has a 33% interest in srdm contract mining and smt mining timber and is in talks with cluff mining about the development of the madibeng platinum prospect.

mmakau is one of the empowerment companies which would be interested in partnering sa platinum producers implats and lonmin to create a new empowerment mining company. in september, implats and lonmin announced a deal worth r5,87bn in which implats agreed to sell its 27,1% stake in lonmin, to spawn another large-scale mining empowerment company.