The sharp pullback in mining and resources shares over the past year exacted a severe toll on the value of the Industrial Development Corporation’s (IDC’s) resources-heavy listed investment portfolio, which declined by a massive R20-billion in the 12 months to March 31, 2009.
The value of the State-owned development financier’s top ten listed holdings, most of which can be classed as resources, fell from R57,1-billion at the end of March last year to only R34,5-billion this year, having improved marginally to over R36-billion since that date.
The value of its 8,5% holding in energy and chemicals group Sasol fell from over R20-billion to R14,6-billion, while its 13,2% position in Kumba Iron Ore, at R6,8-billionimpact rock crusher equipment refurbished, was well down on its March 31, 2008, value of R12,8-billion.
Similar declines were experienced in the value of its 1,5% holding in BHP Billiton, which fell to R6,3-billion from over R8-billion; ArcelorMittal South Africa, where its 8,8% position was worth R2,8-billion in March, 2009, as compared with R7,7-billion in 2008; its 2,9% stake in Spanish stainless steel producer Acerinox, which declagent coal crusher conveyorined from R1,8-billion to R854-million over the 12-month period; Merafe, where the value of its 22,3% position declined from R1,7-billion to R566-million; Hulett Aluminium, where the IDC’s 25,7% stake declined in value from R1,6-billion to R966-million; Sappi, where its 2,9% interest slipped to R281-million to R1,4-billion; and York Timber, which the IDC’s 29,8% stake fell from a value of R572-million to R470-million over the periodjoint grinding surface machines china.
The biggest swing factor in the IDC’s unlisted resources investments, meanwhile, related to its platinum investments, the value of which fell from R4,5-billion in 2008 to R2,5-billion 12 months later.
The IDC also reported more than a R1-billion swing in the performance of its platinum-related equity accounted investments, which moved from a profit of R558-million in 2008 to a loss of R467-million this year.
Still, the IDC continued to show faith in the long-term prospects for mining and beneficiation in South Africa and the rest of Africa, with the IDC’s resource sectors divisional executive Ufikile Khumalo confirming fresh approvals of R2,2-billion in support of 15 new investments during the year ended March 31, 2009.
More than R80-million was set aside for a diamond-cutting and jewellery design investment; a further R286-million in support of iron-ore exploration in the Northern Cape; and another R260-million to help fund a project to mine and process manganese ore in the Northern Cape. The group also made its first-ever investment in Eritrea in support of a gold, silver, copper and zinc project.
The approvals increased the value of the group’s overall mining portfolio to R21,8-billion.
Despite the decline in its capital base and increased investment budgets, the IDC insisted that it remained financially sustainable and well positioned to play a strong developmental role.
It had set a five-year approvals target of R70-billion, having made record approvals of R10,8-billion in 2008/9. And, it was anticipated that resources investment would continue to feature strongly.
Further, it was anticipated that some mining companies that were in distress as a result of the current crisis could receive some support from the State financier, which had set aside R6,1-billion to bail out viable companies that had been placed under short-term financial stress as a result of the slowdown.
Some R800-million of that had already been approved for disbursement to companies operating in various sectors.