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London reassurance

By unknown | Feb 21, 2008 | COMMENTS [ 0 ]



In a move which reflects the extent of international investor nervousness, high ranking South African officials attended Anglo American's results announcement in London instead of the Budget Speech.

Deputy Finance Minister Jabu Moleketi, Minerals and Energy director-general Sandile Noqxina and Public Enterprises director-general Portia Molefe took the podium at Anglo's results in order to give investors renewed confidence in South Africa.

Moleketi said it was "business unusual" in South Africa. He said the country had displayed effective management of macro-economic policies and sustained a stable macro-economic environment.

He reiterated that the government and the ANC were committed to retaining economic policy, including inflation targeting and accumulating foreign reserves.

Noqxina allayed fears over mining rights and announced that the department and Anglo had come to an agreement on new order mining rights and that a licence would be granted by the end of March.

Molefe said that the electricity problem "has been fundamentally stabilised".

She said that if unplanned outages were reduced, the coal-supply problem was sorted out and the build-programme continued, she expected a reserve margin of 18percent by next year. Officially, the reserve margin is around 8percent. Eskom also said that the margin would continue to narrow over the next few years.

But Molefe warned that electricity prices needed to meet the production price.

Anglo chief executive Cynthia Carroll said Anglo would lose production ounces and coal exports because of the power crisis. It was looking at ways of redirecting power to platinum, which had the potential to increase production by 30percent over a number of years. But to do this, power was needed.

Anglo reported a record operating profit of about R70,1-billion in the year to December. Underlying earnings rose 5percent to about R40,6billion.

Carroll said Anglo currently had about R84billion of projects under development with additional projects under consideration of R203billion.

Major approved projects include Los Broncos copper expansion in Chile and Zondagsfontein coal project in South Africa.


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