Alexkor teetering on the brink

───   09:47 Fri, 28 May 2021

Alexkor teetering on the brink | News Article

The Alexkor annual report for the financial year that ended 31 March 2020, was released late due to a reduction in capacity at the company.

Alexkor carries out diamond mining operations in the Richtersveld area and in the shallow and deep waters off the north-west coast of South Africa. The land mining operations are carried out through the Alexkor Richtersveld Mining Company (RMC) joint venture, termed the Pooling and Sharing Joint Venture (PSJV). The PSJV is 49% owned by the Richtersveld community and 51% by Alexkor.


Carat production reduced from 48 127 units in 2019 to 28 896 units in 2020. Revenue thus declined from R209 million in 2019 to R170 million in 2020.

The loss for the year was R109,4 million (2019: R149.6 million), the accumulated loss amounted to R306 million (2019: R302 million). The decrease in the loss was mainly attributable to a reduction in the operating expenditure. The staff component was cut, with 150 staff retrenched during June 2019.

The environmental rehabilitation liability (last valued in 2015) is R204.9 million (2019: R203.9 million).

Cash and cash equivalents come to R305.2 (2019: R302 million). However, included in this amount is R185.4 million (2019: R168 million) held in the Rehabilitation Trust. 

External audit report

The external auditors, Ngubane & Co, issued a disclaimer of opinion on the audit report, on the basis that there are material uncertainties that cast significant doubt on the group’s ability to continue as a going concern.

The auditors also noted that the Environmental Rehabilitation Liability does not include rehabilitation of all infrastructure, but only historical infrastructure.

The audit report noted the internal control deficiencies and a lack of proper recordkeeping, resulting in the cost of sales, trade and other payables, cash and cash equivalents, and property, plant, and equipment, not being supported by appropriate audit evidence. A material loss of R94.7 million was incurred on the “exploration asset” which was impaired.

The report says to refer to note 5 to the financial statements. Note 5 to the financials refers to this as “capitalised exploration and evaluation expenditure”, and no further information is provided as to where the “exploration” took place, and why it amounted to R94.7 million.


Minister of Public Enterprises Pravin Gordhan “retired” the board of directors on September 3, 2019, and appointed Lloyd McPatie as the administrator. McPatie served until February 2020.

Alexkor’s leadership structure as of 31 March 2020, consisted of CEO and acting board chair Lemogang Pitsoe, corporate services manager Pateka Momoza, and company secretary Shokie Bopape.

The CFO, Adila Chohan, resigned in December 2019. The financial manager also resigned, and a “caretaker” had to be engaged to complete the last quarter of the reporting period.

Pitsoe in the CEO overview said that the “lease on our Johannesburg premises has just over a year to run, after which we will restructure the office to establish it as a finance, marketing of diamonds, sale of diamonds and legal and enterprise-wide risk management hub, taking the operational roles to the mine”.

Forensic investigation

Gobodo Forensic and Investigative Accounting were engaged to carry out a forensic investigation in 2019, and the resultant report was published in 2020.

Richtersveld community

The Department of Agriculture, Land Reform and Rural Development was granted an order by the court to place the communal property association (CPA) under administration.

The CPA is a legal entity constituted in terms of the Communal Property Associations Act No 28 of 1996, which was set up to govern Alexkor’s relationship with the Richtersveld community.

Pitsoe in the CEO overview said: “We are liaising with Transnet National Port Authority and Northern Cape Provincial Government on the Boegoebaai Port, Rail and Infrastructure Development Project, which is a greenfield, deep-water port development that should rejuvenate the area and enrich the community. Alexkor is well-positioned to support Transnet as a state-owned company to achieve the mandate on this project.”

Alexkor is implementing the final phases of the deeds of settlement and is transferring township handling and maintenance to the Richtersveld municipality.


Alexkor is required by the Deeds of Settlement to carry out legacy rehabilitation. The outstanding liability at end of March 2020 was R200.5 million based on rates applicable in 2015.

No historic rehabilitation of mining earthworks was done during 2019/20.

It commenced on December 1, 2020, and will include rehabilitation of historic dumps, trenches, and excavations.

Illegal artisan mining is having a negative impact on the environment in regard to rehabilitation costs, waste and pollution management, safety and security of permit holders, monitoring of compliance, and enforcement.

Alexkor/PSJV had illegally commenced the building of the cofferdams with boulder material in contravention of the National Environmental Management Act and Environmental Impact Assessment Regulations in 2012/2013.

Parliamentarian research unit

The parliamentarian research unit produced an analysis of the Alexkor 2020 annual report dated 20 May 2021 for the benefit of members of parliament.

The research unit identifies the following matters that have been deferred to the 2020/2021 year:

A completed report on the corporatisation of the PSJV was not completed and is deferred to the 2020/21 financial year.

Execution of the rehabilitation plan was not completed and is deferred to the next financial year.

The research unit raised important issues to consider, including:

Has Alexkor commissioned any other contractors to mine the deep-sea concession? (IMDSA is the sole operator.)

What monies have been paid to the RMC or Richtersveld community to date as part of their 49%?

The PSJV wants to employ a strategy of employing larger contractors that can explore, bulk sample, mine and process. How will this strategy affect the local community and their businesses?

The research unit noted that Alexkor is facing financial constraints, and recommends that the: “Portfolio Committee needs to hold the Department [of Public Enterprises] to account with respect to the future of the entity, as the community of Alexander Bay and the broader community, depends on Alexkor for its livelihoods.”

Alexkor is operating with a skeleton staff and below par accounting systems, unresolved conflict with marine diamond divers and artisanal miners, unresolved problems with the Richtersveld Community, and not enough funds in the kitty to cover the rehabilitation costs.


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