Mr T Matona

Chairperson

Appointed September 2018

 

“The development of our human capital and the social upliftment

of the Alexander Bay and surrounding Richtersveld communities remains a priority for Alexkor and the PSJV”

Message from the Chairperson

 

Despite substantial swings, in world stock markets, the dollar prices achieved for Alexkor’s diamonds, have held up relatively well. The weakness of the Rand for the first three quarters of the financial year has worked in Alexkor’s favour, but was offset by a marked strengthening of the Rand in the last quarter of the year. With these swings being outside of Alexkor’s control, lasting value can best be created by focussing on the necessary actions that will create a sustainable and competitive business for all our stakeholders.

 

The Board undertakes a comprehensive review of the business at its annual strategic planning session. This review is conducted across the entire value chain of the business, to address structural challenges that have impacted performance over time. Building on the varied and effective steps taken to contain operational costs in recent years, the primary objective of the proposed action was to focus on exploiting previously unmined marine resources in order to create a safe, sustainable, competitive and profitable business for the long-term benefit of all our stakeholders.

 

In order to achieve the above, contracts were awarded to four successful bidders for the mid-water concessions, and the first ship has recently commenced mining operations which will boost diamond production in the coming year. Overheads have been reviewed and reduced while a new organisational design is in the process of being developed to ensure that operations are appropriately supported.

 

ALEXKOR’S HEAD OFFICE

Two critical appointments were made during the year, and the Board welcomes Mr Lemogang Pitsoe, the Chief Executive Officer, and Ms Adila Chowan, the Chief Financial Officer, as executive members of the Board.

 

SRK Consulting, which has extensive experience in the mining space, was appointed to evaluate the financial liability of the legacy rehabilitation, which is a specific requirement of the Deed of Settlement. Due to the demolition of redundant buildings in the Alexander Bay operations and the safe disposal of a considerable amount of asbestos roofing, we are delighted to report that the assessed liability has reduced from R258 million in the previous financial year to R214 million in the 2017/18 financial year.

 

POOLING AND SHARING JOINT VENTURE

Alexkor continues to ensure that the PSJV is operated within a sound governance framework and on commercial terms, through both oversight by management of its activities and Alexkor Board representation in the PSJV Board. Alexkor has fulfilled most of the Deed of Settlement conditions and the remaining conditions will be addressed during the new financial year with the support of all the relevant stakeholders. These include the transfer of properties, mainly houses, and the transfer of the Alexander Bay Town to the Richtersveld Municipality.

 

Diamond production in 2018 was 41 941 carats generating a total revenue of R409 million against budgeted figures of 58 000 carats and R472 million 2017 were 162 172 carats and R758 million). Carat production by International Mining and Dredging South Africa (IMDSA) from our deep water 1C concession was impacted severely by a fire on their ship, the Ya Toivo, which reduced production from 112 047 (2017) to zero carats in the year under review. Recommissioning the Ya Toivo has taken almost a year, but we anticipate the ship to be on site towards the middle of 2018. Net profit for the financial year was R34 million (2018) compared to R6 million (2017).

 

SOCIO-ECONOMIC DEVELOPMENT

The development of our human capital and the social upliftment of the Alexander Bay and surrounding Richtersveld communities remains a priority for Alexkor and the PSJV. One of our bursary students, Ms Baratang Mathobi graduated with a degree in Environmental Management from the Cape Peninsula University of Technology. We are also delighted that our four remaining bursary students from the various provinces are progressing well with their studies. During the year under review, an amount of R2 204 million was invested on training and skills development initiatives of our employees in line with our skills development plans.

 

We are particularly proud that one of our flagship youth-enterprise initiatives, aimed at developing commercial diving skills locally, was completed successfully. This resulted in our four sponsored candidates completing their Class III diving course at a reputable diving school in Saldanha Bay. These individuals now have the opportunity to gain expert diver and business skills, in an on-site workplace exposure programme under the supervision of experienced marine contractors.

 

Also aligned with our focus on youth development and educational transformation, the mine partnered with local schools by sponsoring the salaries of teachers, with a specific emphasis on improving the teaching of mathematics and science. We also funded extra classes for Grade 8-12 learners in these two critical technical subjects.

 

Other initiatives aimed at uplifting the Alexander Bay and surrounding Richtersveld communities included partnerships with community organisations, stipends to community officials and organisers, food hampers for senior citizens in the four towns of Kuboes, Sanddrift, Lekkersing and Eksteenfontein, sports development, assistance to churches, health support, study assistance, and funeral assistance. Total spend on all of the above community programmes amounted to R5.6 million.

 

COMMERCIAL PROPOSITION

Our commercial strategy has been revised to ensure guaranteed value and stability of the supply of diamonds to all our customers. With the encouragement of the Board and management, the mining contractors who have Richtersveld Community Members as majority Shareholders have established the “Richtersveld Kontrakteurs Forum”. The Forum is a non-profit organisation aimed at creating a formal channel for the interaction between forum members and the mine management to pursue opportunities, especially with regards to financing and contractual issues. The Forum is chaired by a Richtersveld community member and its activities overseen by a member of the PSJV Board.

 

Mining of our deep-water 1C concession will recommence mid-2018, with the recommissioning of the Ya Toivo. One marine contractor, Alma Marine, has just positioned its boat in the mid-waters.

 

As a primary producer of gem quality diamonds, Alexkor is in a very favourable position to enter and become a serious player in diamond beneficiation. Scarlet Sky Investments, PSJV’s diamond marketers, has recently commissioned a mini-factory where Alexkor’s rough stone production is cut and polished for local and offshore markets. Production through the mini-factory is expanding towards the agreed 5% target. This has given an opportunity for employment to at least two female artisans-in-training from the Richtersveld. Alexkor’s intention is to increase production so that its own facility can be located in the Northern Cape, thereby creating more job opportunities for Northern Cape.

 

Our participation in other mineral exploration and supply, including thermal coal, are being closely considered in order to develop a diversified portfolio. A due diligence study on an existing coal wash plant situated in the Witbank-Middelburg coal mining hub has been completed, and Alexkor received the approval from the Shareholder to proceed with the necessary PFMA approval processes. Coal beneficiation has long been an opportunity for Alexkor in order to leverage SOC to SOC relationships between Alexkor and Eskom.

 

Subsequent to year-end, the Minister of Public Enterprises placed a moratorium on all acquisitions and disposals. We await an audience with the Minister to chart the way forward. Alexkor will continue to optimise its current assets and ensure expenditure is managed prudently as we embark on the execution of the new strategy.

 

APPRECIATION

On behalf of the Board, I take this opportunity to extend my gratitude to all parties who have worked closely with Alexkor and have assisted us in our quest to fulfil our mandate. Our success as an organisation, would not have been possible had it not been for the constant engagement, feedback and support of all our stakeholders.

 

I am grateful to our Shareholder representative, the former Minister of Public Enterprises, the Honourable Ms Lynne Brown (MP), for her unconditional support and wise counsel at all times. We look forward to our interaction with our new Shareholder representative, the Honourable Mr Pravin Gordhan (MP).

 

I am especially grateful to my fellow Board members for the dedication they have displayed in guiding Alexkor. Their collective support and wisdom have contributed greatly in steering this ship in the right direction.

 

The community of Richtersveld also deserves our gratitude and appreciation for embracing and working side by side with us in ensuring that we create a sustainable future for the business and the community.

 

As Alexkor Chairperson, I am hugely grateful for the excellent support and contribution of the management team, and of every employee in Alexander Bay for their excellent support and contribution.

 

I look forward to a fulfilling 2018/19 financial year as we continue to strive towards realising Alexkor’s vision and mission.

 

 

Reg. No. 1992/006368/30.   Incorporated by Act No 116 of 1992.

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