BHP Billiton sells Richards Bay minerals

On Friday we had an announcement from BHP Billiton which described the completion of the sale of its 37% non-operating interest in Richards Bay minerals to Rio Tinto for $1.9bn. From a South African perspective that is a sizeable deal but for a company of BHP's size it barely reached the headlines.


What I found important to note was this constant trend of the biggest miner in the world divesting from South Africa. I understand that where there is a seller there is a buyer and where BHP want to get out, Rio see an opportunity. But this is not the point. The point is that BHP are only interested in low risk tier one assets and South Africa does not seem to fit this bill as a mining destination.

I don't blame BHP Billiton. Look at what has happened at Lonmin. And it looks like this mindset is spreading which is very dangerous. It is now reported that Implats employees are demanding a further wage increase following an agreement only 4 months ago in April. This is very bad news as NUM loses control of their members at more and more and mines. It also completely undermines the previous conditions set during negotiations in April. What is the point of even discussing a contract if the conditions are so easily broken?


The Marikana incident received so much airtime and flared many polarized emotions already. This mindset could spread like wild fire as workers who are angry and desperate look for any alternative to current conditions. What they don't understand is that the companies in question cannot afford these wages. If Lonmin do not reach an agreement soon and by soon I mean in the next few days, they will have to start shutting down shafts. Then there will be no jobs available and everyone, including all South African citizens will lose out.

Sasha has mentioned this before but I will repeat it for emphasis. The ANC have said that the Marikana incident has not affected foreign direct investment. This BHP Billiton sale is a first class example of a company divesting even though negotiations were probably underway before the incident actually happened. It is the conditions in general which allow for such incidences to occur which will ward off many potential investors. This situation needs to be fixed and fixed fast before it gets out of hand.