'Iron Lady' of mining needs nerves of steel

04 October 2015 - 02:00 By CHRIS BARRON

The executive chairwoman of Kalagadi Manganese, Daphne Mashile-Nkosi, who was named most successful woman in business at the African Business Awards function in New York last week, says running a business is not for the faint-hearted. "If someone says you can start a business today and tomorrow you'll have money to buy a Lamborghini, you must run as fast as you can."Running a mining company is even tougher, she says.She started Kalahari Resources in 2001, got a licence to mine in 2005, formed Kalagadi in a joint venture with steelmaker ArcelorMittal and the Industrial Development Corporation and sank her first shaft in 2008.She and her partners have built a R7-billion mining company in the Kalahari in the Northern Cape, near a town called Hotazel or, if you like, "hot as hell", which it is.If you want to know how bad it is, she employs two full-time snake catchers on site. The day before our interview, two puff adders, one with a baby, and a Cape cobra were found next to the company offices. Another Cape cobra was found on the day of our interview. A worker was bitten last year and taken to hospital; he survived.story_article_left1Most of the infrastructure for the mine is in place, including roads, underground dams, a 19.6km railway line and, nearing completion, conveyor belts that have been enclosed to limit pollution. Plus a seven-storey sinter plant, which she says is the biggest in the world.This processes ore and dust (at the moment for a third party) into a high-grade agglomeration known as sinter for transport to a R4-billion smelter at the special economic zone in Coega, near Port Elizabeth, which she says will be ready in 18 months, four years behind schedule.But she still hasn't actually mined anything. She's hoping production will start early next year."It has taken me from 2001 up to today. I have not yet seen a cent from manganese. In mining, it takes long to make money, when you do it right. But the day you make money, you make it big."She's already made it big in a sense. On the world stage. In 2013 she got the International Star for Leadership in Quality Award. Last year she was named Africa CEO of the year in Geneva, Switzerland, and featured on the cover of Forbes Woman Africa magazine.She's been interviewed on international TV shows and, last year, on the BBC's HARDtalk, where she was asked, in effect, if she was a black empowerment fat cat."I am a beneficiary of BEE but not a free rider," she said.She has been widely hailed as the "Iron Lady" of South African mining and "owner of a multimillion mine".This makes her sound fabulously wealthy. Is she?"Not yet," she says. "I have nothing at the moment. We are not yet generating revenue. Yes, on paper, because I have taken people's money."This includes a R1-billion loan from the IDC and R2.2-billion from the African Development Bank."I need to repay that money. But at the moment I am what they call a paper millionaire. Every asset I have is locked as a security somewhere. I do have assets with which I can raise money, but in terms of real cash I don't have."I get a salary every month, I can afford certain things. But in two, three years' time it will be a different story."Mashile-Nkosi, 57, was born in Pilgrim's Rest in Mpumalanga, where her grandfather was a miner.block_quotes_start We can't run away from the labour issue. Our biggest challenge is low productivity. Labour laws support the present situation, so that is a huge challenge block_quotes_endShe grew up with her grandmother in the old gold-mining town of Graskop in the same province, where her mother sent her when she was struggling.She went to high school in Soweto, where she was in the front lines of the 1976 student uprising. This was sparked by government attempts to impose Afrikaans as the language of instruction."I had to do maths and geography in Afrikaans. When they said 'Away with Afrikaans', I was the first to raise my hands because I was struggling."When it came to colloquial Afrikaans, however, she was and is fluent because, she explains, her mother was "coloured".To prove the point, she unleashes a torrent of invective in "die taal" hot enough to scorch the Kalahari itself. "Hoer" and "hoerhuis" are the only mentionable words one can make out, so quick and seemingly practised is her delivery. It was one of her mother's favourite lines, she says. Like her daughter, she was clearly no shrinking violet.Mashile-Nkosi joined the ANC underground and married Stanley Nkosi, who was convicted of terrorism and spent 10 years on Robben Island with future president Kgalema Motlanthe. He also taught classical guitar to Jeff Radebe, now minister in the Presidency.You don't get much more connected than that, but she denies that their ANC connections had anything to do with where she is today.Stanley died in 2008 after going to Charlotte Maxeke Johannesburg Academic Hospital with a pinched nerve in the neck. She blamed a botched operation and poor nursing and sued the hospital for around R150-million.The case remains unresolved, but she says she has no intention of dropping it.An ANC stalwart her husband may have been, she says, but "his friends are not my friends. I have never got any government business."story_article_right2Those making such insinuations, she adds, would do well to remember "the fact that I sacrificed my life, I was arrested, I was tortured. People must see that as a benefit for them to be free."She got lucky because three white Afrikaners with a lifetime's experience in the manganese sector befriended her when she was at Kumba Iron Ore and "told me about this opportunity. Not because I knew someone from government."They showed her a report, "in Afrikaans", of all the farms in the area that had manganese deposits."I said: 'What is this manganese thing?' I didn't know what it was."They said: 'Here is the information, go to the geoscience council and get more information and apply.'"So as soon as new-order rights legislation was promulgated, giving previously disadvantaged South Africans a foothold in the industry, she applied and was granted a licence.She stumped up R12.5-million for a prefeasibility study and when the results were positive, brought ArcelorMittal and the IDC in as shareholders.She then had to take ArcelorMittal to court to force it to honour its funding commitments as a 50% shareholder. ArcelorMittal wanted to sell its stake and there were reports last year that the Public Investment Corporation was looking to buy it out for R3.9-billion.But the relationship has been restored, she says, and is now "the best that it has ever been. We agreed that it's in the best interests of shareholders to finish what we started together."They were not honouring their agreement in terms of the shareholder contribution. They were a big company with many different projects and we were not a priority."Once production kicks in, she expects R7-billion in annual revenue and profits from year two. Then the company has to start servicing the debt. Some 65% of the project is equity injected by the shareholders, and 35% is debt from the IDC and African Development Bank.She's not worried about falling commodity prices or electricity issues. That's all been factored in, she says. What she is concerned about is the local steel industry, which she hopes will be using her manganese.story_article_left3If it collapses, "we are all dead. Without local steel production there is no need for manganese."The 10% import tariff agreed to by the government "may not be enough" to save the industry.She says both the steel and mining industries need to be more competitive to survive and will only be that if there is a fundamental change in the labour environment."We can't run away from the labour issue. Our biggest challenge is low productivity. Labour laws support the present situation, so that is a huge challenge. Labour is calling for more jobs, but some of their positions are making it impossible to save existing jobs."She wants to see the government taking a stronger position "because if there is no change, we're all going to die. The economy of the country comes first and therefore we need to put our differences aside and look at this as a priority."She believes the government understands how high the stakes are."But we need to push further. It's good and well to say we need the mining sector creating jobs, but if you do not create an environment where jobs can thrive then there is no way the companies can survive - steel companies, mining companies, everybody down the value chain."And you wouldn't want to be on the receiving end of her tongue if her own company goes under.barronc@sundaytimes.co.za..

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