ANC and Russia: It all adds up

The main issues facing the mining industry in SA, it emerged at the “Investing in African Mining Indaba in Cape Town this week, are, surprise, surprise, government inaction and incompetence. By now, even a sympathetic response from President Ramaphosa is suspect. Here and there people were heard muttering: “Sure. What’s in it for the ANC and its cadres?” A great deal of money, it emerges.

By Martin Welz*

The African Mining Indaba in Cape Town heard on Monday that mining companies are prepared to increase their investment in projects in SA by 84% – if the government tackles the dysfunction plaguing the processing of mining permits and approvals for self-generation projects, as well as “constraints” facing our railways and ports.

The Fraser Institute’s Annual Survey of Mining Companies, which was published in April, ranked SA in 75th place out of the 84 jurisdictions in the 2021 investment attractiveness index. This was the worst rating SA had been given since 2009.

Addressing the conference on Tuesday, President Cyril Ramaphosa hinted the government might now be “open to discussing” requests from mining companies to allow for the private operation of Transnet Freight Rail’s dedicated heavy-haul coal, manganese and iron ore export lines.

Rail and port constraints cost mining companies R35bn in lost income in 2021, according to Minerals Council SA.

Did we hear the President mention manganese? That had just got a whole new meaning when, almost simultaneously, investigative journalism group amaBhungane revealed the extent of the ANC’s joint stake with a “listed” Russian oligarch in an extremely profitable manganese mine in the Kalahari.

“We need to improve our railways, which have fallen into disrepair, and the ports, which are not performing at a level where we want them to perform,” Ramaphosa agreed.

Minerals Council SA CEO Roger Baxter had said on Monday that there are R30bn of capital projects awaiting approval, but there is a backlog of 4,500 outstanding licence applications at the department of mineral resources & energy, where it takes more than 350 days for mining and exploration licence applications to be processed.

Ramaphosa’s response: The government also understands the urgent need to fix the regulatory and administrative problems “that had crept into” the application process for mining and exploration licences.

Leaving sceptics asking: what might the ANC’s interest be in “simplifying” regulations and “speeding up” approvals? Need we be reminded that corruption thrives in unregulated “emergency” environments?

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DA leader John Steenhuisen told the nation on his return from Ukraine: “The ANC most certainly does not speak for South Africa on Ukraine, and that was a big part of my message to the people I met there.” But why does the ANC not speak for the people of South Africa on the war in Ukraine?

In March the Democratic Alliance lost no time in taunting the ANC that its abstention was because a US-listed Russian oligarch, Viktor Vekselberg, is listed as having donated R7.5m to the ANC.

Small change, but it now transpires, the DA members were on the right track; they just seriously underestimated the worth of his relationship with the ANC.

The latest report from the investigative journalists at amaBhungane decidedly upped the ante.

Already in 2015 amaBhungane raised the issue of the ANC’s relationship with Putin’s Russia, when they unearthed the secret terms of a proposed nuclear power station deal with Russia. (“The signs were there from early on, fuelling a growing suspicion that Zuma and Putin hoped to bypass a competitive tender process by smuggling a detailed agreement in through the back door,” they noted there. )

Features of that proposed deal that aroused suspicion were:

  • It contained more clauses favourable to the bidder (Russia) than any of the other four bids (from France, China, the United States and South Korea).
  • It contained what amounted to a veto clause excluding any other bidder from working with South Africa without Russian consent.
  • It required the South African government to create a “special, favourable regime” in tax and “other financial matters” for the Russian bidder – on a trillion rand electricity generation deal that would take decades to complete – and, many believe, would in all probability bankrupt the country.

Why would the Russians have been so confident in their demands? In today’s South Africa, the question would be phrased differently: what was/is in it for the ANC and its cadres in high places?

AmaBhungane’s latest report published this week provides at least a more plausible explanation for Ramaphosa’s abstention on the UN resolution condemning Russia’s invasion of Ukraine – and his concern with facilitating the shipping of manganese.

The report launches in with a blunt statement: “United Manganese of Kalahari (UMKL) is set to become an unbridled cash cow for the ANC, especially its funding front Chancellor House. UMK’s riches and its Russian connections create a strong motive for the party’s equivocation on the Russian invasion of Ukraine.

“Financial records from Cyprus show that UMK paid out a staggering R2.4bn in dividends in 2020.”

Chancellor House’s indirect 22% share of those dividends would have amounted to R528m. It has since increased its stake in the company by buying out another shareholder, so that dividends totalling hundreds of millions in 2021 and beyond will continue to flow into the ANC’s largest declared donor.

This can be inferred from the accounts of the Russian half of the UMK joint venture, a Cyprus-registered entity called New African Manganese Investments (NAMI) through which Russian billionaire Viktor Vekselberg (the same) owns shares in UMK.

In 2018 Vekselberg and six other wealthy Russian “oligarchs” perceived to be close to the Kremlin were made Special Designated Nationals by the US government. Their assets in the US were frozen.

In March this year, following the invasion of Ukraine, the sanctions against Vekselberg and others were intensified with his yacht and jet, together allegedly worth $180m, being frozen. The yacht, a 2000 ton floating palace named TANGO, is registered in the Cook Islands. After the freezing, the FBI went a step further and seized the super-boat in April.

The South African held 51% in UMK is owned by Majestic Silver Trading 40 (MST) which is a politically connected South African consortium including Chancellor House, Pitsa Ya Setshaba Holdings (PST) and a Kalahari Community Trust.

Chancellor House was identified as an ANC front in 2005 when it was rapidly striking deals in the mining and energy sectors, sometimes under questionable circumstances.

Today it no longer makes any secret of its role. What has escaped notice is the evidently enormous importance of UMK in the scheme of things. The scale of dividends, revealed in the financial statements of NAMI indicate that the ANC is unlikely to have any comparable dependable source of cash: R15m each from Chancellor House, UMK and MST, making a total of R45m per year.

AmaBhungane concludes: “This [..] means that the relationship with a supposed Kremlin insider is key to [ANC] party finances.”

[Extracts from amaBhungane latest report published with permission. You can read the full report on their website at www.amabhunghane.org]

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