NMDC to form 50:50 joint venture with South African firm

State-owned mining major NMDC is pinning hopes on major opportunities coming its way in South Africa, following its agreement with Kopano Ke Malta, a company promoted by the Congress of South African Trade Unions (Cosatu).

“We have not tied up with a trade union, but an investment arm promoted by the Cosatu. We have entered into an agreement with Kopano for taking up mining activities in South Africa. Kopano will provide us with the resources and we will use our mining skills to make good of the resources,” Rana Som, chairman and managing director, NMDC, told DNA.

He said Kopano and NMDC will form a 50:50 joint venture (JV) and NMDC would nominate its members to the board of the JV.

“Commencement of field operations would depend on the allocation of resources by Kopano. Though it is difficult to say when the operations would begin, the agreement provides for 50:50 role in terms of investments and sharing of benefits,” he said.

The JV — Kopano NMDC Minerals Ltd — will focus on exploring coal, iron ore and manganese resources in South Africa. The JV has been set up under the charter of Black Economic Empowerment (BEE) scheme. The NMDC-Kopano deal is also being seen as a major deviation from the existing BEE framework-based deals in South Africa. According to reports in the African media, the BEE framework has so far been used by the elite under the guise of benefiting the poor blacks.

However, Som said, “The activities would also mean a lot to empowerment of blacks and we are committed to doing our best for that as part of the agreement.”

Media reports point at a similar BEE deal between Arcelor Mittal and Imperial Crown Trading, which is believed to be closer to certain political groups in South Africa. The rights granted under the deal to prospect Sishen iron ore mine turned controversial with President Jacob Zuma found to be associated with rich Indian families. South African unions criticised the deal since it was seen to be deviating from the BEE charter.

On the other hand, Kopano is being seen as a broad-based outfit for black empowerment with over two-million memberships in its promoter Cosatu.

Meanwhile, NMDC is showcasing its corporate social responsibility and workmen welfare programmes to assure its South African partner that there would be no deviation from the BEE framework and the efforts would definitely be to share the benefits with the community.