South African Mining Stocks Crash To 5-Year Low Valuations After Policy Shock

South Africa’s new mining charter (that all local mines should be 30% black-owned) is scaring away investors.

The charter revision comes shortly after Africa’s most industrialised economy entered its first recession since 2009, with investor confidence already shaken by infighting within the ANC over the scandal-hit presidency of Jacob Zuma.


The proposal was unveiled by the Department of Mineral Resources which said it intends to raise the minimum black-ownership level from the current 26% to ensure more proceeds from the country’s natural resources flow to the black majority, Mining Minister Mosebenzi Zwane told reporters on Thursday in Pretoria. The charter will also require companies to pay 1% of annual revenue to communities and new prospecting rights will require black control, Zwane said.


“The mining sector does not exist in a vacuum,” Zwane said as he unveiled the charter on Thursday. South African miners needed “strong legislative regimes” to thrive, he added.


“We have listened to miners who have not seen real economic benefit; people who don’t see benefit of transformation structures,” he said.

And the reaction is clear, as Bloomberg notes, the average price-to-earnings ratio of the country’s miners has fallen to the lowest level in five years...


As HSBC says mining stocks will become “non-investable” if the new regulations are implemented in the current form.

As the FT adds, President Zuma has called for “radical economic transformation” to more fairly share the benefits of South Africa’s economy among the black majority. Zwane, a close ally of embattled president Zuma, said the government was “not blind” to the downturn but added that “there’s a need to produce a new era of industrialisation driven by young economic champions,” referring to the charter as a “revolutionary tool”.

Miners who rely on international supply chains to operate in South Africa may be hard hit by rules that require companies to procure 80 per cent of services and 70 per cent of goods from black-owned local suppliers.


In addition, the holder of a South African mining right will be forced to pay 1 per cent of its annual turnover to communities.

Confirming that this is the latest disastrous populist policy adopted by South Africa, the rand has promptly tumbled on the news...


froze25 (not verified) Mon, 06/19/2017 - 15:41 Permalink

So how long till we have all out race war there? The rate its going I am thinking by the end of 2018. I got to admit the whites that stay there have some serious balls. Are the Whites still allowed to own firearms?

HRH Feant2 (not verified) froze25 (not verified) Mon, 06/19/2017 - 16:43 Permalink

HGTV had an episode a few years ago that showed a young married white couple from SA that were looking at houses in neighboring Namibia. The young man had obtained employment but the hoops he had to jump through to simply rent a house were ridiculous. They had to have a bank account in Namibia and some type of permission. The houses and apartments they looked at were nice. I remember the big electrified fence along with razor wire and bars over all the windows, even on the second floor. Supposedly it was to keep the animals out. I didn't believe that then and don't now.

In reply to by froze25 (not verified)

taketheredpill froze25 (not verified) Mon, 06/19/2017 - 16:51 Permalink

When we visited an Indian family in Johannesberg, their home had 10 foot concrete walls (fences wont stop bullets).  The top of the wall had barbed wire AND was also electrified.  They had a home invasion 5 years earlier because there was a gap in the back wall security.  4 guys with machine guns ransacked the house over a 1 hour period but nobody was shot/raped.These communities are not walled off but they do have 24 hour security that drives around and will discourage you from walking after dusk.The owner of the house to me to Little Mogadishu, an area of old Joberg where Somalians have moved in and turned into a thriving city within a city.  Had a coffee and then we drove off.  A block away was a park that was full of refugees from the rest of Africa, places so fucked up that S.A. looks like paradise.  Every single square foot of this park was covered in garbage and it looked like a hell-hole full of desperate people.Another block from hell park, a 5 minute walk, and my friend pointed to a house his daughter and son-in-law had just bought.  People there are so used to the threat of violence that they seem immune to the fear.If you go online you can see amazing houses that are for sale at a fraction of what they would cost anywhere else.  Plus you can hire a cook and housekeeper for very definitely do want want to live there, and a lot of the people who do are looking to get out.

In reply to by froze25 (not verified)

not dead yet Hillarys Server Mon, 06/19/2017 - 17:47 Permalink

Truck drivers would tell me that in some big US cities, especially with a large dindoo population, there would be "shopping areas." Areas that if you were stopped at a light the dindoos would smash off the trailer lock and raid the trailer. Cops in those areas let the drivers know they could run the red lights if it was safe to do so. Got ahold of a trucker atlas and they clearly marked the "shopping areas." Surprise, Chicago had lots of them. Years ago when my brother was delivering on Long Island he had to open his doors on the street, no room to open them at the dock, and before he was back in the cab the dindoos were in his trailer. One trucking company we dealt with litterally bolted their trailer doors shut to keep out the dindoos.

In reply to by Hillarys Server

Hillarys Server orelius Mon, 06/19/2017 - 16:56 Permalink

There was a science article a couple weeks ago where they genetically tested all the Egyptian pharaoh mummies.

And the pharaohs were genetically closest to blond Swedes, i.e., the original Europeans.

After that, those ethnic Europeans who built the pyramids mixed with Africans and became the modern day Egyptians who build falafels.

In reply to by orelius

ogretown Mon, 06/19/2017 - 15:54 Permalink

Yawn. Many of the mines are down half way to China. The costs are going up as the grades go down.  And with investment money drying up I can easily see the mines closing.  The government looters are making themselves look bad by grabbing at a few pennies whilst most of the big dollars have already left the country.  

taketheredpill Mon, 06/19/2017 - 16:02 Permalink

  All my Gold stocks are local or mostly in my own country.  The problem with some of the high flyer stocks is they have mines in countries you've never heard of.When (If) Gold ever takes off, all it takes is some local thug with 3 jeeps and a dozen men with AK-47s to roll up and say "thanks for the Gold, stupid".Another way to look at it is, if you consider Gold as a portfolio insurance policy....why would you have an insurance policy from a company located in a country you couldn't find on a map when your home is here?

BarbaricRelic Mon, 06/19/2017 - 16:15 Permalink

WOAH! WOAH WOAH WOAH.....Wait a minute....I was told things would get better and everyone would get along in South Africa post aparteid! Was I lied to?? Who could have imagined things would turn out this way?? I mean...I'm like...BAFFLED! 

mosfet Mon, 06/19/2017 - 16:27 Permalink

Still plan on holding my longshot S. African Platinum miner ANGPY - The largest Platinum producer in the world.  Currently it trades around $3.60 but saw a high of $186 during the Financial Crisis.  It wouldn't even have to get halfway back up there to be a 25 bagger but I see this as my riskest long-term investment by far.

HRH Feant2 (not verified) Mon, 06/19/2017 - 16:32 Permalink

"The charter will also require companies to pay 1% of annual revenue to communities and new prospecting rights will require black control, Zwane said."

Those new laws/regulations are insane! If I were an investor I would run as far and as fast as possible away from SA. Companies have to give away 1% of annual revenue? And new claims will require black control? That killed it right there. No one with any intelligence wants blacks in charge.

Looks like SA is going to be another Liberia or Zimbabwe (formerly Rhodesia.)

JohninMK HRH Feant2 (not verified) Mon, 06/19/2017 - 17:23 Permalink

One of the interesting bits is that if in the past a share was sold to a black and he sold it to say a white then it is not a black share anymore. Just try and keep track of that in the share register.There are a lot of Afrikaans (from Dutch/Boer stock) still there intending to stay. Many are well tooled up being ex-military and many are in groups covering large areas with large numbers of supportive blacks around their farms will aware what happened when the management skills were thown off the land in Rhodesia, sorry Zimbarbwi.

In reply to by HRH Feant2 (not verified)

taketheredpill Mon, 06/19/2017 - 16:41 Permalink

 My wife and I met a few young couples with kids when we were in Johannesburg a year ago.  They all asked a ton of questions about Canada, mostly about the economy, education system, healthcare.One young woman asked how cold it got.  My wife answered that yes, it can get very cold, and there were some days we had to make sure the kids faces were covered up really well so they didn't get frostbite when they walked to school.Her husband leaned over and I heard him whisper in her ear "they can walk to school!" 

mrtoad Mon, 06/19/2017 - 16:41 Permalink

In other words its much better to let private foreign companies take your resources and sell them to other countries for a huge profit and give the people fuck all. Australia have let Adani in to extract their coal from Queensland and they have been given huge government incentives like not having to pay royalties for 5 years and huge tax breaks. Fuck off foreign ownership.

gdpetti mrtoad Mon, 06/19/2017 - 17:54 Permalink

None of the money will go to any 'people' anyway... this is typical for the 'game'.... this is how western banksters have played it for a long time... "Economic Hitmen" ... they find local ones and let them join in on the party... guess who that 30% will go to? Hint: it won't be 'the people'.

In reply to by mrtoad

not dead yet Fahq Yuhaad Mon, 06/19/2017 - 18:05 Permalink

Lot's of whining and complaining in the US about white privlige, racism against blacks, and how it was the blacks that built everything. Good to know all those old videos, movies, and pictures showing the building of skyscrapers, dams, bridges, houses, and other infrastructure were photo shopped to make the sea of black faces of the millions of workers white.(sarc). Yet for all their "suffering" none want to go back to the old homeland to build the utopia they would have if the whites were kept out.

In reply to by Fahq Yuhaad

radbug Mon, 06/19/2017 - 18:22 Permalink

The last of the Boomers is 57, 7 years beyond the Spendalot peak. Face facts, the Commodity Supercycle has gone the way of the dodo. Nobody needs South Africa's hard commodities any more. (They don't need Australia's much, either, sob!)

SkuzApo Tue, 06/20/2017 - 02:44 Permalink

As a South African citizen, this is an unmitigated disaster.But that is how the ANC roll...When something doesn't work, all they do is double-down on even grander and more expensive failures and up the racist anti-white rhetoric.BBEEE has not worked and it will NEVER work. You cannot make the poor rich by stealing from the rich. This countrys regime rules on a bed of lies about our past, populist and racist rhetoric and utter incompetence and corruption.We were sold a notion of a country of equals... What we got is a racism and apartheid far worse than "Apartheid" ever was. Their are more race based laws in place today than there were in 1994.The regime has NO intention of creating a country of equals. They know that the only way they can retain their stranglehold on power is to keep pitting the rich against the poor, the blacks against the whites, the men against the women, the straits against the lbgts, etc. etc. etc.South Africa is a FUBAR mess at the moment, but we are still here keeping our heads above water, like we have done for 360 years.All those people that say you should immigrate - LOL - easier said than done... I have travelled extensively, and I run my own business, but do not make the requirements to get permanent residence anywhere I would want to live. Most people that say "leave" have NO idea how onorous the conditions are. In fact, I would say that 85% plus of the host countrys citizens by birth would not make their own countrys immigration criteria. Furthermore, most countries are making their pathways to legal immigration much more difficult.So... please don't say "Just Get Out". I have looked into the requirements for Canada, the US, UK, Australia and New Zealand. Currently the only two we qualify for (with an offer of employment - of course) are Australia and New Zealand. Australia is off the list. It's a complete nanny state run by raving libtards and other assorted lunatics. New Zealand is great, but we are now required to have a visa, so the old stand-by of just arriving and looking for work is gone. If the kids are supposed to be in school, the visa will not be issued. Sending one of us over to find work and then bring the rest over later will competely destroy our savings within three months.So... Do we destroy our savings and start life again at 50, or stay and hope we will survive the idiocracy of our regime?Catch 22...We're buggered if we stay here and we're buggered if we go...

Charvo Tue, 06/20/2017 - 07:28 Permalink

Biggest mistake America ever made was bringing Africans over to America as slaves.  America has a lifetime debt that it has to pay.  In Asia, blacks aren't welcome because they aren't productive people.