Telkom juggles partners and targets in Nigerian bids
October 14, 2005
 By Renée Bonorchis
The word is that fixed-line operator Telkom is likely to exit from one of its partnerships with Vodacom, in which the two were bidding for a 51 percent stake in Nigerian fixed-line group Nitel and its cellular arm, M-Tel. This is according to a source close to Telkom.
Telkom owns 50 percent of Vodacom; the rest is owned by UK-based Vodafone and investment group VenFin. Telkom, Vodacom and MTN, among others, were shortlisted by the Nigerian government for the Nitel stake.
The winning bidder is expected to be announced before the end of the year. The source said that because of Vodacom's court battle with Econet Wireless Group over who was entitled to buy a 5 percent stake in Nigerian cellular operator V-Mobile and chances that Nitel's winning bidder might be announced before the case was finalised, Telkom felt that its alliance with Vodacom would threaten its chances.
In March Reuters quoted a Telkom official who said Vodacom would prefer to buy V-Mobile if it could resolve the long-running lawsuits over the firm. But in the new scenario, Telkom may go ahead with the Nitel bid and spin off M-Tel at a later stage.
According to our source, Telkom is in talks with two other bidders for Nitel, Orascom and Huawei. One analyst said there was a "possibility that Telkom might partner with somebody else".
Another analyst said it would make a lot of sense for Telkom to partner with Orascom, given that Orascom had shown the ability to operate in markets with big populations and strong competition, such as Pakistan.
Telkom's vice-president for business development, Mike Mlengana, said the company would comment once the process was over. He said Telkom had started its Nitel due diligence. Vodacom referred all questions to Telkom. TM
Beneficiation 1
Lindiwe Hendricks, the newish minister of minerals and energy, is usually content at public appearances to speak broadly about the journey the minerals legislation regime has taken since the advent of democracy in 1994.
She tends to keep her speeches on safe ground and is generally a competent, if not very exciting, speaker. It is difficult to blame her for this as she took over from a very forceful personality, the now deputy president Phumzile Mlambo-Ngcuka, who had her personality stamped on every piece of legislation that was pumped out over the past six-odd years.
But yesterday Hendricks broke cover when she dropped a beneficiation bombshell at the baptism of the country's largest empowerment company, yet to be named but called Newco in the interim, birthed by Kumba and Anglo American.
Hendricks, fresh out of the cabinet meeting where the government's road map to whip 6 percent growth out of the economy had been discussed, said that while the empowerment deal was "admirable", more needed to be done with beneficiation to stimulate economic development and job creation.
Beneficiation is the adding of value to raw materials, and the government is determined to have more value added to South Africa's resources. Hendricks wanted to see a new steel smelter built and challenged the new Kumba and Newco to do so.
"I wouldn't have said it if I wasn't serious about it," Hendricks said in response to a question.
She said she had made it clear that she expected her challenges to be taken up by the companies that attended yesterday's announcement.
"If it doesn't happen, well there is always legislation to make it happen."
Anglo American South Africa chief executive Lazarus Zim said: "There are a whole range of things we need to look at ... not just ownership."
A beneficiation bill is one of the last pieces of mining-related legislation that has still to be crafted and is in the pipeline. It may be that Hendricks is coming into her own and those predictable, content-free speeches are over. Personally I hope so, and if that is the case, welcome minister. NS
Beneficiation 2
For some economists, beneficiation has long been a "nice to have" for developing countries so they can get more bang for their bucks when it comes to export earnings.
Unfortunately, as the long, tiresome and so far fruitless search for a major investor in the planned Coega aluminium plant has shown, it's also an expensive business and not for sissies.
After pushing the private sector since 1994 to do more about beneficiation, the department of minerals and energy has now come up with a raft of laws to force them to do it. One deals with diamonds and the other with precious metals.
Both involve some form of state involvement in ensuring that some of our raw materials are channelled towards local, preferably empowered, manufacturers and cutters.
In the case of diamonds, there will be a state diamond trader that will have first pick of the diamonds produced, some of which would be channelled to the value-adding business.
Although the unions would love to see one, there will be no state trader in precious metals, probably because of the complexity of the international market. There will be a single regulator covering both sectors.
Beneficiation has been a pet project of Mlambo-Ngcuka, who believes local beneficiation can create a lot more jobs and could do our reserves a power of good. She has been involved in the establishment of several gold and jewellery manufacturing projects around the country.
But, as this week's hearings on the Diamond Act Amendment Bill showed, there are powerful vested interests such as De Beers that don't want the status quo to change and recoil at the thought of the rough diamond trade being dominated by a state trader.
ANC MPs believe they are being rather selfish and almost unpatriotic and, naturally, the debates became a bit rowdy at times.
A lot of issues around policy, power and practicalities still have to be ironed out, never mind the funding being obtained to run the new system and the necessary training being provided.
It does seem that beneficiation is firmly on the map and industry players would be well advised to get with it. The Precious Metals Bill will have its own public hearings next week, when the ramifications of the planned new law will emerge more fully. LL
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