Investors are growing wary of South32, the firm BHP Billiton (ASX, NYSE:BHP) will finish branching out by midyear, as the new company will rely heavily for earnings on South Africa, a region with a known record of not making things especially easy for miners.
According to Financial Review, there are a number of challenges South32 is likely to face, including potential Black Economic Empowerment ownership concessions, probable power price increases as they renegotiate contracts at Eskom, and the need to make a decision on reinvestment in South Africa Coal.
But what is keeping analysts awake at night the most, according to the article, is the fact that the South African government is reviewing the mining industry’s compliance with rules under the mining charter, which includes a 2014 target of 26% black ownership of companies. And based on several reports that figure is likely to be increased.
But chief executive officer elect Graham Kerr has noted that the challenges around Eskom and DMR (South Africa’s Department of Minerals) are not new and that BHP has historically had a good relationship with both.
“If you look at the DMR policy today, we are fully compliant with the charter, what is probably more important is that South32 believes in the spirit and the intent of South Africa’s transformation empowerment agenda,” Kerr was quoted as saying.
With a once-off cost of around $738 million before tax, South32’s will be based in Perth, but the new firm is already setting up a regional head office and global shared services centre located in Johannesburg.
Besides a primary listing on the Australian Securities Exchange, South32’s shares will also be traded at the Johannesburg Stock Exchange and London.
All of BHP shareholders will receive shares in South32 if the miner’s board and shareholders approve the demerger at a shareholders meeting scheduled for May 6.
3 Comments
Cornelius Van Oudorp
Ja … another tough day in Africa. And that state-owned company that plunges us into darkness is called Eskom, not Escom. That is so despite the “commision” in the history of the formerly respected brand.
Guest
★❦★❦68$ AN HOUR@ag18:<-Let's start work by Google!!Yes,this is definitely the most financialy rewarding I've had . Last Monday I bought a great Lotus Elan after I been earnin $9534 this-last/5 weeks and-a little over, $10k lass month . . I started this four months/ago and immediately started to bring home minimum $97 per/hr ... I work ->
Going Here you
Can Find Out,,,,
►►►►► https://WorkOnlineMobile.com/get08/position…
✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴✴
miket
It’s high time that BHP, Rio Tinto, Anglo American, etc wake up and pull out of South Africa completely. The country is rotten to the core, “led” by a crook and his cronies and the begging bowl is the now the national symbol, disguised as Black Economic Empowerment.