MC Mining’s announcement last week that an agreement was reached allowing the Kinetic Development Group (KDG), a China-based company, to purchase a 51% post-transaction share in the mining company through a US$90 million (R16 billion) investment deal has environmentalists worried.

According to a press release issued by MC Mining, the proposed investment by KDG will not only advance MC Mining’s flagship Makhado steel-making and hard-coking coal project just north of the Soutpansberg into production but is also expected to accelerate the broader strategy of the group to develop their various tenements in the Vhembe region of Limpopo Province, including the Greater Soutpansberg Projects (GSP) and the Vele Aluwani Colliery (Vele). “KDG is an integrated coal-mining and trading group incorporated in the Cayman Islands, with extensive operational experience and expertise, and a successful history of production from its assets in the autonomous regions of Inner Mongolia and Ningxia, China, for over a decade,” said MC Mining.

In their statement, MC Mining go on to list several transaction highlights, stating that the deal will create a diversified international coal-mining group with operations on two of the fastest-growing continents in the world. They say it will also unlock the potential of the Makhado steel-making coking-coal project to become the largest hard-coking coal operation in South Africa, providing an opportunity for import substitution for local large-scale industry.

Another highlight listed is that the deal will leverage cross-pollination of international best practices and local knowledge from the skills available to KDG and MC Mining to minimise implementation risk and optimise operational efficiency across the MC Mining projects. Furthermore, because of the scale of the planned projects, it will facilitate the deployment of new capital to develop business support infrastructure such as logistics and utilities delivery. The deal will also result in direct investment into a region with a deep, supportive, and skilled labour pool. And just in case you were wondering, the proposed Musina Makhado Special Economic Zone (MMSEZ) also features as a highlight, with MC Mining stating that the deal will “enable MC Mining to take advantage of business-development incentives offered by the adjacent Musina Makhado Special Economic Zone, further creating vertical integration opportunities for industrial development of the region.”

But who is the Kinetic Development Group? According to the statement, KDG is an integrated coal-mining group listed on the Hong Kong Stock Exchange and has a current market capitalisation of over US$1.2 billion. KDG’s business covers the full coal value chain, including mining, processing, logistics, and marketing. The key coal resource under operation of the group is the underground thermal coal Dafanpu Coal Mine located in Inner Mongolia, China.

As for MC Mining, the company is an ASX- and JSE-listed coal exploration, development, and mining company operating in South Africa. Their key projects include the Uitkomst Colliery (metallurgical and thermal coal), Makhado Project (hard-coking coal), Vele Colliery (semi-soft coking and thermal coal), and the Greater Soutpansberg Projects (coking and thermal coal).

The announcement once again caused environmentalists to react. “It is very bad news. Our coal miners have found another buyer for our coal resources, buyers in China who have now acquired a controlling stake in the coal mining company - to help them strip mine Vhembe,” said Ms Lauren Liebenberg from the Living Limpopo environmental group. Living Limpopo’s members and affiliates include BirdLife Africa, EarthLife Africa, the Endangered Wildlife Trust, All Rise Attorneys for Environmental and Social Justice, the Vhembe Biosphere Reserve, SOLVE, the Herd Reserve, and several thousand individual community members.

Liebenberg pointed out that MC Mining is, in fact, already owned by a Chinese-South African investor consortium. She said that this would just make them a majority foreign-owned (Chinese) company, listed in Australia. “And let's remember that MC Mining, essentially now a Chinese coal-trading company, holds mining rights granted by the Department of Mineral Resources and Energy on 107,000 Ha on 97 farms in the Vhembe region. Under South Africa’s Mineral and Petroleum Resources Development Act, the holder of mining rights acquires surface rights to the land they haven't purchased, i.e. have the right to commence mining operations on someone else's land,” said Liebenberg.

According to Liebenberg, the independent resources and reserves statements released states that there are 10 billion tons of hard-coking and thermal coal in the Greater Soutpansberg Coalfield. “We are in trouble,” said Liebenberg, especially from an environmental perspective. “The exploitation of the coal resources in the Greater Soutpansberg Coalfield is not in the interests of anyone but MC Mining and the Kinetic Development Group in China – the real economic benefits for Limpopo will be wretchedly meagre, the toll immense,” concluded Liebenberg.