This is a tale of capitalism at its worst. Of exploitation of indigenous peoples and corruption at the highest levels.
Platmin Limited was founded in 2004. It was the 3rd largest South African mining company which was listed in Johannesburg and London stock exchanges. Its main focus was on platinum group metal (PGM) deposits in South Africa in the Pilanesberg Platinum Mine.
13 May 2010 Temasek invested in a US$100m non-interest bearing convertible debenture issued by Platmin Limited. convertible to common shares at US$1.125 each, on 31 Dec 2010. It meant Temasek made a short term loan to Platmin. The maturity was later extended to 28 Feb 2011 and conversion price to US$0.84. Temasek exercised the conversion into 119,047,620 common shares. Temasek ended up with 160,199,883 representing 17.6% of company equity. The additional 41,152,263 shares we assume must be open market purchases. Assuming these were purchased at the same price of US$0.84 (data not available) then total investment by Temasek was about US$135m.
Platmin was delisted in 2011. Reason given was its low turnover volume. It then migrated its place of incorporation to Guernsey. Tax havens present a risk in the extractive industry value chain. But all this makes sense in the wheeling and dealing that followed.
Bushveld Igneous Complex :
To the North East of South Africa lies the Bushveld Igneous Complex, a two-billion-year-old geological phenomenon that contains up to 90% of the world’s known reserves of platinum group metals, or PGMs, being palladium, ruthenium, rhodium, osmium, iridium and platinum itself.
This is the bowel which sprouted the mining czars of the past where families like the Openheimer built their huge obscene wealth. The Openheimers were the owners of Anglo American and de Beers, two of the biggest mining corporation in the world. By 2010 they sold de Beers to Anglo. By 2011 they had also divested substantially their holdings in Anglo. Harry Openheimer used his position to slam the Afrikaners for their racist apartheidism, but built their family massive wealth on the backs, blood, sweat, and lives, of poorly treated cheap black immigrants.
With the end of apartheid in 1994 came much needed land reforms and Big Mining had to upgrade. A 2002 legislation passed all mining rights to the state. Mining models needed to incorporate a social justice programme known as BEE (blacks economic empowerment), a sort of 'bumiputra' sharing scheme with the local community. On paper, BEE sounded good. But in a world where Big Mining's money ruled, endemic corruption of state officials all the way to President Zuma, ancient tribal affiliation with dubious chieftains and kings that cross artificial state boundaries, the uneducated poorest poor and powerless inhabitants had no chance.
Anglo American mess
Anglo operated the huge Rustenburg Platinum Mines (RTM) in the western part of the Bushveld, in the land of the Bakgatla tribe. RPM packaged a deal with a divestment of 15% of equity to the Bakgatla tribe in 2006. When the dust was settled, the tribe found itself the owners of a holding vehicle in debt, they had given up old royalties for nothing, and cash payments from operations and the state disappeared into thin air. The government formed the Maluleke Commission to sort out the matter. But to some, it felt the commission made it into a road show that tried to sort out the messy claims of chieftains, instead of the issue of exploitation of the weak and powerless community. (A trivial - R174-million ended up funding the Moruleng Stadium, built as a training ground for the 2010 FIFA World Cup).
From Platmin to Sedibelo Platinum Mines Ltd :
Pallinghurst Resources Limited (Gernsey) was set up in 2006 as a private equity and venture capital fund investing into mining sector. The CEO was Brian Gilbertson,a PGM vet who had honed his skills in BHP Biliton, Gencor, Vendatta Resources and Anglo American's Rustenburg Platinum Mines. He had his eyes on 3 sites in the Bushveld Igneous Complex - Pilanesberg Platinum Mine, Magazynkraal and Sedibelo Project. His strategy was to acquire all 3 sites to achieve economies of scale.
Magazynkraal and Sedibelo Project : Gilbertson sought out the Bakgatla tribe who had substantial interest in these 2 sites. A Bakgatla-Pallinghurst consortium JV (BPJV) was formed with Bakgatla holding 50.1%. By 2008, with the Bakgatla as the BEE partner, Pallinghurst wheel and deal through complex structures that effectively resulted in the transfer of mining rights from the locals to BPJV. The Bakgatla ended up exactly in similar situation 2 years ago as the Anglo American deal. The community felt deals were made with chieftains they do not recognise, and they were never consulted.
Pilanesberg Platinum Mine : This was the jewel that Gilbertson wanted. It was the cash cow to fund his scheme. The mine was controlled by Platmin and it had no intention of selling. Gilbertson's strategy was to buy out the minority BEE partner of Platmin and replace with BPJV thus gaining the mineral rights. Then he bided his time. The opportunity came during the 2008 economic downturn. Commodity markets crashed and Platmin ran out of cash. Platmin took on debt from Pallinghurst.
Enter Temasek in 2010. Apparently Temasek must have been brought in as part of Pallinghurst consortium to take up the non-interest bearing convertible debenture loan. With the conversion exercised in 2011, Pallinghurst gained control of Platmin.
By 2012, Pallinghurst was ready to combine the 3 sites into one mega mining project. That was why Platmin was delisted from London and Johanesburg exchanges and domicile changed to Guernsey. Sedibelo Platinum Mines Ltd (SA) was founded in Dec 2011 to consolidate all operations of the 3 regions. Platmin was dissolved. As at 2018, major shareholdings of Sedibelo were:
Platmin Limited was founded in 2004. It was the 3rd largest South African mining company which was listed in Johannesburg and London stock exchanges. Its main focus was on platinum group metal (PGM) deposits in South Africa in the Pilanesberg Platinum Mine.
13 May 2010 Temasek invested in a US$100m non-interest bearing convertible debenture issued by Platmin Limited. convertible to common shares at US$1.125 each, on 31 Dec 2010. It meant Temasek made a short term loan to Platmin. The maturity was later extended to 28 Feb 2011 and conversion price to US$0.84. Temasek exercised the conversion into 119,047,620 common shares. Temasek ended up with 160,199,883 representing 17.6% of company equity. The additional 41,152,263 shares we assume must be open market purchases. Assuming these were purchased at the same price of US$0.84 (data not available) then total investment by Temasek was about US$135m.
Platmin was delisted in 2011. Reason given was its low turnover volume. It then migrated its place of incorporation to Guernsey. Tax havens present a risk in the extractive industry value chain. But all this makes sense in the wheeling and dealing that followed.
Bushveld Igneous Complex :
To the North East of South Africa lies the Bushveld Igneous Complex, a two-billion-year-old geological phenomenon that contains up to 90% of the world’s known reserves of platinum group metals, or PGMs, being palladium, ruthenium, rhodium, osmium, iridium and platinum itself.
This is the bowel which sprouted the mining czars of the past where families like the Openheimer built their huge obscene wealth. The Openheimers were the owners of Anglo American and de Beers, two of the biggest mining corporation in the world. By 2010 they sold de Beers to Anglo. By 2011 they had also divested substantially their holdings in Anglo. Harry Openheimer used his position to slam the Afrikaners for their racist apartheidism, but built their family massive wealth on the backs, blood, sweat, and lives, of poorly treated cheap black immigrants.
With the end of apartheid in 1994 came much needed land reforms and Big Mining had to upgrade. A 2002 legislation passed all mining rights to the state. Mining models needed to incorporate a social justice programme known as BEE (blacks economic empowerment), a sort of 'bumiputra' sharing scheme with the local community. On paper, BEE sounded good. But in a world where Big Mining's money ruled, endemic corruption of state officials all the way to President Zuma, ancient tribal affiliation with dubious chieftains and kings that cross artificial state boundaries, the uneducated poorest poor and powerless inhabitants had no chance.
Anglo American mess
Anglo operated the huge Rustenburg Platinum Mines (RTM) in the western part of the Bushveld, in the land of the Bakgatla tribe. RPM packaged a deal with a divestment of 15% of equity to the Bakgatla tribe in 2006. When the dust was settled, the tribe found itself the owners of a holding vehicle in debt, they had given up old royalties for nothing, and cash payments from operations and the state disappeared into thin air. The government formed the Maluleke Commission to sort out the matter. But to some, it felt the commission made it into a road show that tried to sort out the messy claims of chieftains, instead of the issue of exploitation of the weak and powerless community. (A trivial - R174-million ended up funding the Moruleng Stadium, built as a training ground for the 2010 FIFA World Cup).
From Platmin to Sedibelo Platinum Mines Ltd :
Pallinghurst Resources Limited (Gernsey) was set up in 2006 as a private equity and venture capital fund investing into mining sector. The CEO was Brian Gilbertson,a PGM vet who had honed his skills in BHP Biliton, Gencor, Vendatta Resources and Anglo American's Rustenburg Platinum Mines. He had his eyes on 3 sites in the Bushveld Igneous Complex - Pilanesberg Platinum Mine, Magazynkraal and Sedibelo Project. His strategy was to acquire all 3 sites to achieve economies of scale.
Magazynkraal and Sedibelo Project : Gilbertson sought out the Bakgatla tribe who had substantial interest in these 2 sites. A Bakgatla-Pallinghurst consortium JV (BPJV) was formed with Bakgatla holding 50.1%. By 2008, with the Bakgatla as the BEE partner, Pallinghurst wheel and deal through complex structures that effectively resulted in the transfer of mining rights from the locals to BPJV. The Bakgatla ended up exactly in similar situation 2 years ago as the Anglo American deal. The community felt deals were made with chieftains they do not recognise, and they were never consulted.
Pilanesberg Platinum Mine : This was the jewel that Gilbertson wanted. It was the cash cow to fund his scheme. The mine was controlled by Platmin and it had no intention of selling. Gilbertson's strategy was to buy out the minority BEE partner of Platmin and replace with BPJV thus gaining the mineral rights. Then he bided his time. The opportunity came during the 2008 economic downturn. Commodity markets crashed and Platmin ran out of cash. Platmin took on debt from Pallinghurst.
Enter Temasek in 2010. Apparently Temasek must have been brought in as part of Pallinghurst consortium to take up the non-interest bearing convertible debenture loan. With the conversion exercised in 2011, Pallinghurst gained control of Platmin.
By 2012, Pallinghurst was ready to combine the 3 sites into one mega mining project. That was why Platmin was delisted from London and Johanesburg exchanges and domicile changed to Guernsey. Sedibelo Platinum Mines Ltd (SA) was founded in Dec 2011 to consolidate all operations of the 3 regions. Platmin was dissolved. As at 2018, major shareholdings of Sedibelo were:
27.64%
| Pallinghurst |
25.74%
| Bakgatla tribe |
15.75%
| IDC (state agency) |
5.35% |
Anglo American |
5.19% |
Temasek (booked under Ridgewood Investments) |
Sedibelo supposedly sits on mineral resources estimated at R25b. But it had no joy ride. The prolonged weakness of platinum prices prevented increasing production capacity and the benefits of economies of scale. The current strategy is to ride out the weak prices without increasing capital needs. It has been making losses. But further problems loom as South Africa proceeds to lock down open-pit mining to minimise environmental disasters.
The Ho Jinx factor :
After apartheid, the ANC ascension has seen the Rand tumbling.
With impeccable timing, Temasek's investment in 2010 saw the Rand depreciating against all major currencies including S$. Temasek's investment of US$135 upon conversion to common shares 28 Feb 2011 was about ZAR938m = S$171m. Due to a 121% depreciation of the Rand, the investment is now worth about S$77m.
The moral question :
Villages surrounding the Pilanesberg Platinum mine have severe unemployment, lack of basic infrastructure and are without running water, despite being on one of the riches reserves of platinum in the World, and their land encroached by open-pit mining. Big Mining, state players, and tribal chiefs in the area are accused of stealing billions that was supposed to be spent on developing the surrounding area. The mess of missing funds and Bajgatla loosing their mining rights are still being sorted out in the courts and commission of inquiry. The Bakgatla people found themselves having to sell their cattle to pay for legal costs.
Was Temasek an innocent investor who meant to do well for its shareholders and invested in complete ignorance of the Big Mining fraud against tribal communities? Either way, the answer is uncomfortable.
Side note : It's likely Temasek networked with the Openheimers through this investment. They have gone on to seal the relationship in a 50-50 venture in setting up Tana Africa Capital in 2011. Capitalised at US$400m, the fund invest in African assets. With 121% depreciation of the Rand, Temasek's US$200m participation has now been wiped out by 55% from currency translation losses.
Check out Portfolio Compilation
The Ho Jinx factor :
With impeccable timing, Temasek's investment in 2010 saw the Rand depreciating against all major currencies including S$. Temasek's investment of US$135 upon conversion to common shares 28 Feb 2011 was about ZAR938m = S$171m. Due to a 121% depreciation of the Rand, the investment is now worth about S$77m.
The moral question :
Villages surrounding the Pilanesberg Platinum mine have severe unemployment, lack of basic infrastructure and are without running water, despite being on one of the riches reserves of platinum in the World, and their land encroached by open-pit mining. Big Mining, state players, and tribal chiefs in the area are accused of stealing billions that was supposed to be spent on developing the surrounding area. The mess of missing funds and Bajgatla loosing their mining rights are still being sorted out in the courts and commission of inquiry. The Bakgatla people found themselves having to sell their cattle to pay for legal costs.
Was Temasek an innocent investor who meant to do well for its shareholders and invested in complete ignorance of the Big Mining fraud against tribal communities? Either way, the answer is uncomfortable.
Side note : It's likely Temasek networked with the Openheimers through this investment. They have gone on to seal the relationship in a 50-50 venture in setting up Tana Africa Capital in 2011. Capitalised at US$400m, the fund invest in African assets. With 121% depreciation of the Rand, Temasek's US$200m participation has now been wiped out by 55% from currency translation losses.
Check out Portfolio Compilation
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