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Diversified minerals and energy company Exxaro is eyeing green hydrogen, new Exxaro CEO Dr Nombasa Tsengwa disclosed on Thursday when the JSE-listed company reported 147%-higher half-year group earnings before interest, taxes, depreciation and amortisation (Ebitda) of R10 603-million on mainly the 142% increase in coal Ebitda in the six months to June 30.

Responding to Mining Weekly on Teams on the possibility of the group entering the green hydrogen space, Tsengwa said: “We know we have to look at it, because you can see countries are already negotiating with one another about which one will be the generator and which one will then be the offtaker of green hydrogen.” (Also watch attached Creamer Media video.)

Green hydrogen, she said, would be part of the green energy solution, "and therefore we've got to look at it, and we're doing a lot of studies in this regard.

“Hopefully, within the next year or so, we'll be able to say whether that's something that we want to do ourselves, or something that we want to partner with others in doing.

“We know the likes of Sasol are already in that space and it's something maybe that, over time, talking to the likes of Sasol, we may find each other, and probably look at collaboration, but it is of interest to us because it is a solution in the industry that we’re in,” added Tsengwa.

The renewables strategy within Exxaro that is being executed by wholly owned Exxaro company Cennergi is very much the key driver in the group’s carbon neutrality plans.

Going forward, combined renewables plans already in place are poised to slash Scope 2 emissions at Exxaro Resources’ Grootegeluk coal mine, at Lephalale, in Limpopo, by up to 90%.

Moreover, Cennergi has 200 MW of solar and wind projects at advanced stages of development, much of the megawattage in Mpumalanga, aimed at helping to catalyse South Africa’s crucial just energy transition.

Mining Weekly: What will Cennergi be doing at your own mines?

We’ve got a lot of projects lined up for ourselves. At Lephalale, you may be aware of our solar PV plant of about 70 MW that has just been registered by Nersa. We're looking at the first quarter of 2024 when we'll start seeing the generation of those new electrons into that operation. We hope that we can make the excess electrons available to other players in that area or elsewhere as the wheeling policy becomes sorted out by government. We are also looking to do the same in Mpumalanga. We’re partnering with Enertrag, who've got a lot of capacity as well space to assist us in making sure that we create a renewable energy hub in the Mpumalanga area, which will cover all of our mines in Mpumalanga and the mines of others, who may be in need of decarbonisation capacity.

What will Cennergi be doing at the mines of others?

The market in South Africa is really opening up. We've heard what the President is saying. Anyone who can provide those excess electrons to the grid is solving our problem as a country. We have already got capacity of 229 MW from our two existing wind farms. We need to look at increasing, from a distributed generation point of view, with this liberalisation of beyond 100 MW. We need to see ourselves getting to a position of growth, making sure that we identify where those opportunities are, which we think we know. There should be some of them around the areas where we operate. We think we can really grow those spaces behind the meter, to make sure that we can actually even provide the communities. There are opportunities for municipalities, so with this partnership with Enertrag, we believe that we can do so much more.

I see that the Ebitda margin of your renewables company Cennergi was a sky-high 80%. Does that reflect what the situation is likely to be going into the future?

The team worked under very difficult conditions from a wind factor point of view - we've seen all over the world, where the wind has been really underperforming, but I think the availabilities of the wind turbines ha...

Surface gold mining company DRDGold expects to report lower earnings on better-than-guided production and lower capital investment.

In the 12 months to June 30, DRDGold produced 183 902 oz of gold at a cash operating cost of R600 875/kg, with a capital investment of R584.1 million.

Guided was between 160 000 oz and 180 000 oz at R600 000/kg and R600-million capital.

Shareholders were advised on Wednesday that the JSE-listed company’s earnings a share would be down 32% to 12% and headline earnings a share between 33% and 13% down.

The expected earnings decreases follow Ergo’s 6%-revenue decrease to R3 704.9-million on a 3% lower rand gold price received and a 3% decrease in gold sold.

For the Ergo and Far West Rand Gold Recoveries reclamation operations owned and managed by DRDGold, revenue was 3% down at R5 118.5-million.

Ergo's revenue decreased by 6% to R3 704.9-million owing mainly to a 3% decrease in the rand gold price received and a 3% decrease in gold sold. The decrease in gold sold resulted from a 4% decrease in volume throughput offset by a 1% increase in yield.

Far West Rand Gold Recoveries’ revenue increased by 7% to R1 413.6-million on 9% more gold sold, resulting from an 8% increase in yield, notwithstanding volume throughput decreasing by 1%, the company headed by CEO Niël Pretorius stated in a stock exchange news services announcement accessed by Mining Weekly.

The impact of the decrease in revenue on earnings and headline earnings was further impacted by a 13% increase in cash operating costs to R3 463.8-million on mainly above inflationary increases in the costs of key consumables, diesel, steel and cyanide.

At Ergo, cash operating costs increased by 13%, to R3 009.8-million and at Far West Rand Gold Recoveries by 12% to R454-million.

CASH-RICH AND DEBT FREE

DRDGold's cash and cash equivalents at the end of its financial year were R2 525.6-million, with an available-if-needed R200-million ABSA Bank revolving credit facility.

In the 12 months to June 30, DRDGOLD generated free cash flow – cash inflow from operating activities less cash outflow from investing activities – of R871.6-million and paid cash dividends of R513.3-million.

The group remains free of any bank debt.

Precious and future-facing metals mining company Sibanye-Stillwater on Wednesday advised of an upcoming half-year earnings decline in a trading statement and operations update for the six months to June 30.

A decline of 47% to 52% is expected in earnings a share and headline earnings a share for the period compared with the comparative period in 2021.

The decline is put down to a second-quarter reduction in gold production from the South African gold operations owing to the industrial action that began on March 9 and was resolved on June 13.

An additional cause was the suspension of processing activities in December to allow for the reinforcement of the Beatrix tailings storage facility (TSF), which resulted in no first-quarter ore being processed or sold from the Beatrix operations.

Second-quarter production from the US platinum group metal (PGM) operations was also impacted by the severe regional flooding in Montana on June 12 and 13, with the Stillwater operations being suspended for a seven-week period.

Relative precious metals prices were also lower with the average first-half rand four-element (4E) PGMs basket price down 19% and the average US dollar 2E PGMs basket price 15% lower.

This decline in average commodity prices also resulted in the group recording a 45% decline in the results of equity-accounted investees after tax. These negative financial impacts were partially offset by lower royalties and mining and income taxes, the Johannesburg and New York-listed company, headed by CEO Neal Froneman, stated in a release to Mining Weekly.

OPERATING UPDATE

Sibanye-Stillwater’s half-year operating update reported lower 4E PGMs production from the South African PGM operations, including lower purchase of concentrate.

A 9% decrease in underground 4E PGMs production to 751 717 4Eoz was partly offset by a 6% increase in surface production of 72 089 4Eoz, with third-party purchase of concentrate treated at the Marikana smelting and refining operations of 25 346 4Eoz, 27% lower owing to the winding down of two third-party purchase of concentrate contracts.

Mined 2E PGMs production from the US PGM operations of 230 039 2Eoz was 23% lower year-on-year owing mainly to the temporary cessation of operations at the Stillwater mine following the regional flooding, as well as mining flexibility and labour constraints which continued to impact productivity at both operations. The Stillwater mine’s 2E PGMs production was 15 000 2Eoz lower, with a total 60 000 2Eoz of planned production impacted during the seven-week operational suspension.

First-half recycling ounces fed decreased by 10% to 361 333 3Eoz year-on-year mainly owing to ongoing logistical constraints globally and adjustments to the blend ratio of high-grade recycle feed following the reduction in volumes of mined concentrate post the flood event.

Production from the South African managed gold operations, excluding DRDGOLD, decreased by 77%.

Maintenance work on the Beatrix TSF was completed at the end of May.

Concluded was the first-quarter acquisition of the Sandouville nickel refinery in Le Havre, which produced 3 499 t of nickel metal, 1 066 t of nickel salts and 113 t of cobalt chloride since the acquisition.

Sibanye-Stillwater is a multinational mining and metals group with a diverse portfolio of mining and processing operations and projects and investments across five continents. The group is also a PGM autocatalytic recycler and has interests in mine tailings retreatment operations.

The company will release its half-year results on August 25.

Copper and zinc mine development company Orion Minerals has raised $1.35-million under its share purchase plan (SPP), with strong support from shareholders, particularly those in South Africa.

The SPP of the Sydney- and Johannesburg-listed company, headed by CEO Errol Smart, forms part of a broader capital raising to advance the company’s early production strategy at its South African base metal projects in the Northern Cape.

In May, Orion took a pivotal step towards the development of its permitted flagship Prieska copper/zinc mine after signing non-binding term sheets with Triple Flag for an $87-million secured funding package. In addition to working closely with Triple Flag, Orion is also continuing to progress discussions with banks, leading development financing agencies, and other financing institutions in relation to funding the Prieska development.

Importantly, very positive progress has also recently been made towards a funding package with a leading development financing agency following an extended period of due diligence and negotiations, the company stated in a stock exchange news service (SENS) announcement accessed by Mining Weekly.

The successful completion of the capital raising, together with other funding sources, would put Orion in a strong position to progress towards development of near-term production assets in the second half of 2022, helping to realise its vision of becoming an integrated producer of future-facing metals in South Africa, SENS added.

Smart hailed what he described as “particularly strong support from our South African shareholder base, which was a great result and reflects Orion’s positive standing in the local community”.

He added that Orion was also continuing discussions with other potential funding partners, strategic investors and development finance agencies to progress its base metals development strategy in South Africa.

Coal mining and renewable energy company Exxaro advised on Tuesday of its half-year earnings being set to soar on the exceptional performance of its coal business.

Half-year earnings before interest, taxes, depreciation and amortisation (Ebitda) will be up 137% to 151% compared with the first half of last year, and headline earnings a share for the six-month period ended June 30 are expected to be between 18% and 32% up on those of the first six months of last year.

The Ebitda range foreseen is from R5 933-million to R6 540-million.

Coal’s exceptional performance was driven by higher sales prices and higher sales volumes, despite logistical challenges, the Johannesburg Stock Exchange-listed company stated in a stock exchange news service announcement to Mining Weekly.

The higher prices and volumes more than offset logistical issues as well as the lower income from Exxaro’s equity-accounted investment in Sishen Iron Ore Company Proprietary Limited.

Exxaro’s half-year financial results are scheduled to be released on Thursday, August 18.

Exxaro has been headed by new CEO Dr Nombasa Tsengwa since the first of this month. The company is one of the largest South Africa-based diversified resources companies, with main interests in the coal, iron-ore and renewable energy commodities. Cennergi is its wholly owned renewable-energy arm.

Exxaro, which co-created Cennergi in 2012, has had two wind farms with a combined capacity of 229 MW in the Eastern Cape since 2016.

The company has named manganese, bauxite and copper as minerals that form part of its decarbonisation strategy.

Coal mining and exporting company Thungela, which generated R8.9-billion free cash in the first six months to June 30, is sharing R500-million of it with employees and communities, is setting out to plant a million trees to purify water, is putting in solar power to reduce its carbon footprint as it charts a pathway to net zero, has introduced a programme to uplift small enterprises, is opening a new replacement colliery, and is going out of its way to ensure that Mpumalanga is not left behind when the province transitions out of coal.

Taking into account the latest interim dividend as well as the R137-million Thungela distributed earlier this year, every one of the company’s 4 500 qualifying employees will get about R100 000 each while the community trust works on how to best use the nigh-R400-million contributed to it to ensure that the trust outlives the mines.

The Johannesburg- and London-listed company is trialling water management technologies involving phytoremediation and taking environmental protection steps under its environmental, social and governance (ESG) commitments.

Twenty thousand trees have already been planted, of a kind that are able to lock up the sulphates and heavy minerals in the mine contaminated water so that cleaner water can be discharged.

A 4 MW solar photovoltaic plant is going up at Thungela’s Zibulo mine and the upcoming Elders mine, a replacement mine, will be solar powered as well.

The Department of Water and Sanitation (DWS) has approved its remediation plan to restore the river system that was polluted by a spill into the Kromdraaispruit and Wilge river, and the former Kleinkopje mine is being held up as an example of how mine land can be returned to sustainable use.

Seen as encouraging by the company are recognition by the Intergovernmental Panel on Climate Change (IPCC) that carbon removal technologies, such as carbon capture, storage and use (CCSU), will have to play a role in helping to meet global climate change mitigation targets, as well as the work being done by the US’Environmental Protection Agency (EPA) to find more uses for carbon dioxide (CO2) once it has been captured.

These and many more points were made by Thungela CEO July Ndlovu in a Teams interview with Mining Weekly. (Also watch attached Creamer Media video.)

Mining Weekly: How is the R500-million being distributed to workers and community members?

There are two trusts, and each one is going to get R250-million. The Employee Partnership Plan involves roughly 4 500 qualifying employees, and if you take what we distributed in respect of 2021, and this dividend, it equates to roughly R100 000 per qualifying employee. The other trust, the Nkulo Community Partnership Trust, has got its own rules, and they are working on how to use almost R400-million made in the first year to begin to build a trust that can outlive the life of our mines.

What is your new Thuthukani programme doing to uplift enterprises in Mpumalanga?

Thuthukani is another intervention that we have put in place to ensure that we not only incubate small- to medium enterprises, but also give them the skills, as well as access to lending, because that is usually one of the more difficult things. Over and above that, we want to ensure that they've got access to opportunities. That’s what that incubation and supply development programme is meant to do.

What is Thungela doing to improve the environment under its ESG commitments?

We said we will, in the first instance, think broader in terms of ESG, beyond what everyone usually does, which is talk to a subset of ‘E’, which is only the emissions rather than the environment. We think about it holistically. Having said that, strategically we have also said that we want to spike on the ‘S’ - our employees, communities, and the small-to-medium enterprises in the areas where we operate. Equally, spiking on ‘S’ talks to what I spoke to first in our results, which is our commitment to run a fatality-free business, and I'm ...

JSE- and London-listed thermal coal-mining and marketing company Thungela has approved the declaration of an interim gross ordinary cash dividend totalling R8.2-billion from retained earnings accrued during the six months to June 30, on profit for the reporting period of R9.6-billion, which is more than 27 times higher than last year’s first-half profit.

Thungela was listed in Johannesburg and London in June 2021 following the demerging of Anglo American’s the South African thermal coal operations.

Although full-year guidance for export saleable production has been revised down reflecting expected ongoing Transnet Freight Rail (TFR) performance, Thungela has a far-reaching value-over-volume plan which could see value remaining sky high on highest-margin coal being railed.

Providing insight into the context in which Thungela presented such impressive results, Thungela CEO July Ndlovu outlined how the Russia/Ukraine conflict’s demand pull had been coupled with supply constraints across the major coal-producing regions, resulting in coal prices soaring to unprecedented record levels.

Despite TFR’s under-performance hindering Thungela’s ability to take full advantage of the strong demand environment, the company delivered operating free cash flow of R8.9-billion resulting in a net cash operating free cash flow position of R14.8-billion – R11.8-billion more than in the first half of 2021.

The board’s R60 a share represents 92% of operating free cash flow and is way above the stated policy of returning a minimum of 30% of free cash flow to shareholders.

In addition to the R273-million received by the trusts in 2021, the SACO Employee Trust and Nkulo Community Partnership Trust will receive R500-million in keeping with commitment to share the value with stakeholders.

Moreover, on the environmental front, a further R200-million half-year discretionary contribution has also been made to the company’s Green Fund.

Thungela is distributing all excess cash above the liquidity buffer of R6-billion.

The board has also approved the R2-billion Elders production replacement project, which maximises coal quality.

Elders will replace volumes from the Goedehoop colliery, which is coming to end of its life.

“This is quite an important project as it will allow us to preserve jobs and livelihoods of particularly small enterprise businesses within the region that we operate,” Ndlovu told a media conference in which Mining Weekly participated.

In June, Thungela launched the Thuthukani supplier and enterprise development programme to support local business and stimulate job creation. Thuthukani means to uplift in isiZulu and the programme aims to provide hands-on entrepreneurial business support in the form of non-funding technical enablement to small enterprises in Mpumalanga, around Thungela’s mines.

Thungela is seeking to geographically diversify its coal business.

RAIL CONSTRAINT EXPECTED TO REMAIN

Although improvement is expected from TFR given work done, Thungela has decided to be conservative in its expectation by continuing to implement its mitigating actions and lowering production guidance from 14-million tonnes to 15-million tonnes to 13-million tonnes to 13.6-million tonnes. The lower guidance does not rely on material improvement by TFR.

The expectation is that capital expenditure in 2022 will likely be on the lower end of the guided R1.7-billion to R2-billion.

HIGHEST MARGIN COAL TO BE RAILED

In response to Mining Weekly, Ndlovu pointed to the announced likelihood of only 60-million tonnes of coal being railed through the rail corridor to Richards Bay Coal Terminal in 2022, requiring Thungela to mitigate its business by setting out to rail the highest-margin coal.

The results just out also involved Thungela taking action to ensure that it sends the highest-margin coal down the corridor to maximise earnings.

The first mitigating action taken is to stockpile where necessary lower-margin, lower-grade coal, such as middlings coal.

The secon...

Prevailing macro-environment challenges and changing palladium market conditions have prompted a strategic revision of Sibanye-Stillwater’s United States platinum group metals (PGM) operations, which in June suffered a one-in-200-year flood at Stillwater, in the Montana region.

These challenges and conditions are now being factored into the US business of the Johannesburg- and New York-listed company to come up with an optimum commercial position. (Also see attached Creamer Media video.)

Sibanye-Stillwater sees the palladium market moving into a surplus in the middle of this decade, which is expected to lead to price weakness a few years later.

The company’s references in February to more extreme weather events from an Angry Planet and the big economic squeeze are now beginning to feature.

“As we’ve started looking forward, we’ve become, let’s say, ore confident that the palladium market will move into a surplus in the middle of this decade, and that’s going to, of course, lead to potential price weakness a few years later,” said Sibanye-Stillwater CEO Neal Froneman during a presentation on the company’s flood-hit US PGMs business covered by Mining Weekly.

Therefore, it did not make smart commercial sense to spend millions of dollars on the Stillwater East ‘Blitz’ capital project, which will deliver into price weakness down the line.

“That just does not make sense and hence when you couple our view of the palladium market plus the macroeconomics that we’re going to be dealing with going forward, means we really need to reconsider the best way to extract value.

“So, the bottom line is this: the prevailing macro environment and changing palladium market conditions have prompted a strategic revision of the US PGM operations and our previous expansion plans.

“It is prudent to defer capital investment on the original growth project and re-engineer the operations to protect margins and long-term value,” said Froneman.

The Montana region’s floods on June 12 and 13 damaged critical infrastructure, which is still constraining access to Stillwater, which was suspended for seven weeks, at an estimated 2022 production loss of 60 000 ounces of two element (2E) PGMs. Recycling feed rates necessary for blending with high-grade autocatalyst feedstock has also been hit by the lower mined production.

The two-element mined all-in sustaining costs (AISC) of Sibanye-Stillwater’s US platinum group metals operations are being guided at $1 380/oz to $1 425/oz, and production guidance is now 445 000 oz to 460 000 oz, down from the originally top-guided 580 000 oz, not only on flood impact but also on engineered fill-related areas at Stillwater East and grade and production issues at East Boulder.

AISC and all-in costs are forecast to converge from 2026 to between $950/2Eoz and $990/2Eoz.

A build-up in mined 2E PGM production to 700 000-plus 2E ounces a year is forecast from 2027. With US recycling is now at a lower 700 000 oz to 730 000 oz.

Moreover, high labour turnover and loss of seasoned staff has led to an over reliance on contractors, with added to cost pressures. The focus is on recruitment, training, and retention to reduce the contractor mix over time.

In addition, the production build up has been delayed by operational disruptions, challenging ground conditions and critical skills shortages.

A a long-term engineered cemented backfill solution is having to be deployed owing to orebody widths and ground conditions restricting the use of overhand ramp-and-fill and the existing cemented rock fill plant being high cost and low in productivity.

NEW STILLWATER EAST APPROACH

At Stillwater East, formerly known as Blitz, mining has been suspended in areas that require the engineered cemented backfill solution util a new plant is commissioned in 2025 at a cost of $30-million, causing a 40 000 2Eoz loss in 2022.

The developed state will be increased to 12 months by the end of 2024 and to 18 months in the long term.

STILLWATER WEST FLEXIBILITY CREATIO...

Financial risk management, solutions and insights company Fitch Solutions Country Risk and Industry Research (Fitch Solutions) says lithium prices will remain “extremely” elevated this year and next, as accelerating demand for lithium-ion batteries and a tight upstream supply keep market supply constrained.

As such, the firm suggests that Chinese lithium carbonate 99.5% will average at about $68 000/t this year and $55 000/t in 2023, compared with $18 938/t in 2021 and thereby surpassing past historical levels.

The firm also expects Chinese lithium hydroxide monohydrate 56.5% to average at about $67 000/t this year and $56 000/t in 2023, compared with $16 506/t in 2021.

Lithium demand has grown by an estimated 83.2% year-on-year between 2021 and this year, rapidly rising from an estimated 462 400 t in 2021 to a forecast of 846 800 t for this year.

For the year to date, Fitch Solutions says lithium prices have rallied as post-Covid-19 demand for lithium chemicals recovered in the automotive industry amid rising oil and refined products prices and higher inflation affecting consumer preferences.

The rally began in mid-2021, when prices towards the fourth quarter started to steadily climb past $14 000/t to $30 000/t by year-end – driven by strong automotive demand in Europe, China and the US. These price pressures were exacerbated by the relatively illiquid market for lithium spot trading, the firm notes.

Prices continued to climb, reaching $50 000/t by early February this year and peaking at about $78 000/t in early April, from which point prices have since settled.

In terms of new supply, Fitch Solutions’ database of global lithium projects reveals only four mines, with an expected capacity of about 75 000 t, to come online this year.

In 2023, Fitch Solutions expects at least 11 projects to start production, while demand continues to rise.

Regionally, explicit political and policy support in countries such as Australia, Canada and the US is expected to accelerate project timelines, while persistent political risks in Latin American countries create risks for project timelines despite Fitch Solutions’ expectations that output will continue to post strong growth in Argentina and Chile.

As a result, the firm forecasts the lithium market's supply deficit to widen from 259 000 t this year to 329 000 t in 2023.

Fitch Solutions expects production growth to accelerate in Australia, which it expects to remain the largest lithium-producing country out to 2031, accounting for 35% of global production by that point in time.

Output in the country is set to almost triple from this year to 2031, while Chile and China will nearly double their output. Production in Brazil will grow almost three-fold, albeit from a low base, while Argentina is expected to post the greatest relative growth with a sixfold increase in output to 2031.

However, Fitch Solutions expects pricing pressures to ease slightly as more consumers close offtake agreements with mines that include price caps, global growth slows, and speculative pressures about fears of future undersupply diminish slightly.

In this regard, the firm forecasts that lithium prices will crash in 2025 as a large volume of production comes online, only to recover upwards again as the supply deficit expands once more.

Fitch Solutions says lithium will be a leading beneficiary of the accelerating uptake of electric vehicles (EVs) to 2031 owing to its prominent featuring in battery chemistry.

The firm’s automotive team forecasts global EV sales will reach 11.4-million units globally by the end of this year, representing a 147.4% year-on-year increase.

In addition, another trend, such as the likely strong popularity of battery swap stations mean that the actual number of EV batteries manufactured will exceed the number of EVs sold, Fitch Solutions says.

Outside of the automotive sector, the firm says utility-scale batteries, energy storage batteries, portable electronics and electric mobility devices wi...

Experts in the spheres of law, mining and financial services are divided on whether South Africa’s public market has become too institutionalised, which, if so, makes access to capital for junior miners and exploration companies all the more challenging.

With South Africa punching way above its weight in terms of the depth of the public market and its size relative to the size of the economy, consultancy AmaranthCX director Paul Miller questions why the market is losing listings year after year, with few true initial public offerings being made and no junior mining and exploration companies able to raise money.

South Africa has 85% of all pension fund savings in Africa and is the nineteenth- largest public equity market globally but ranks thirty-second in terms of economy size. This means that public market capitalisation is about four times the size of gross domestic product.

Miller points out that the JSE held about half of the world’s mining capitalisation in 1980, but only 40 mining companies are listed on the exchange currently, with 12 being small capitalisation stocks. The number of listed companies in the public market has also declined from 760 to 330 in the past 30 years.

According to Miller, at least 32 more companies are expected to delist from the JSE this year.

About 97%, or R19-trillion, of all gross market capitalisation on the JSE is in companies in the top 100, with actual trade happening among the top 40 companies.

The JSE, therefore, has a massive concentration of market capitalisation in the upper third of the market, while there is also massive concentration on fund management.

Miller adds that 90% of all long-term savings in South Africa are managed by just 11 institutions, including long-term insurance assets, making this market highly concentrated. This has resulted in local public markets favouring size as a criterion for support above all else.

He believes that the local public market is not a level playing field for competing financial intermediaries, as individual investors and other noninstitutionalised entities are often crowded out by large institutions.

For example, most retail investors have been moved into model portfolios that mimic the funds managed by the top 11 institutions, while online stockbrokers, which Miller says comprise the last redoubt of direct retail investors, tend to support only secondary trade and not primary capital raising.

He argues that the market is so concentrated because of the benefits stemming from tax incentives for savers that, in fact, disproportionately benefit large institutions.

South African savers are forced to invest through institutions and have no self-managed options, as opposed to other jurisdictions, such as Canada, the US, the UK and Australia, where savers do have such options.

“Rent-seeking dominant institutions make sure that tax incentives are available only to individuals who invest through them. There is also unfair discrimination in favour of collective investment schemes, or unit trusts, and the way they are taxed, compared with how private portfolios are taxed,” Miller adds.

He says the public is being excluded from the public market, leading to neither supporting the development of mining anymore – the industry which, ironically, sparked the establishment of South Africa’s public market.

Practitioners at law firm ENSafrica echo Miller’s sentiment that there is not a level playing field for competing financial intermediaries in South Africa.

The firm notes that the delisting phenomenon is not itself a cause for concern. For example, there is a global trend of the consolidation of companies into larger corporations, and of companies remaining privately owned for longer periods. Neither of these trends is necessarily unwelcome. However, a concern does arise when a net delisting trend emerges over time, as is the case in South Africa.

ENSafrica banking and finance executives Angela Itzikowitz and Era Gunning, as well as candidate legal pract...