Do I smell smoke?12 Oct 2013 18:42
Do I smell smoke????
Future of Elitheni, port depends on SNR success
By PATRICK CULL on October 7, 2013 in Opinion · 0 Comments
THERE was understandable excitement when the first shipment of coal from the Elitheni Mine left East London for China at the beginning of last month, given the impact the mining of coal will have not only on the lives of the people of Emalahleni, but also on the future of the Port of East London and the economy of the Eastern Cape.
At the celebration to mark the departure of the first shipment, port manager Jacqueline Brown pointed to the impact the export of coal from East London would have when she stated: “The volumes of coal that will be exported in the years to come, strengthen the business case for investment in the port and will without doubt change the face of a port that is now poised for significant growth”.
PATRICK CULL
Given the investment planned by Transnet that includes a dedicated coal terminal and the deepening and widening of the entrance, there is every reason to celebrate, as it would not be unkind to state that East London has to date been the runt of the litter of ports in this country in terms of investment.
At one stage, it was even suggested that the port might be closed, although that was before the appointment of Brian Molefe as Transnet Group CEO.
Recognising the importance of the development of infrastructure in bringing the Eastern Cape into the mainstream economy, Molefe ensured that substantial capital investment was earmarked for the province.
There does, however, appear to be some cause for concern about the future of Strategic Natural Resources (SNR), which owns 74% of Elitheni, and one wonders whether there is not an opportunity for the Industrial Development Corporation (IDC) to consider becoming the strategic investment partner that SNR is seeking or for the Eastern Cape Development Corporation to consider what assistance it might be able to offer.
On September 27, SNR issued a statement saying it had received payment for the first shipment of coal, an odd announcement to make and one that suggests that an injection of cash was required urgently if the company was to remain operational.
SNR chairman Andy Brennan acknowledged as much in his comments on the audited results for the 16 months to June 30 this year, saying the company was “currently facing acute working capital constraints”, adding that the situation would be “alleviated in the short term” by the first export consignment.
The announcement of the first payment, however, did little for the share price – the company is listed on the London AIM – and by the end of trading on the day of the payment announcement, the share had shed 2.35% and was at a 52-week low.
Since then it has tracked even lower.
That would indicate a distinct lack of confidence in the market and clearly SNR is aware of this with its deputy chairman Don Nicolson
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