Resources up as JSE cheers bid to block new Mining Charter

Johannesburg - Resources, including gold shares, pulled the JSE higher on Tuesday morning on news that South Africa’s mining companies have applied to the high court in Pretoria to block the controversial Mining Charter, arguing that the new rules would destroy the industry.

READ: Zwane accuses Chamber of Mines of opposing transformation

Most of the other indices were drifting slightly lower in line with the pattern over the past few days, but by mid-morning the Resources index was already 2.09% higher, while the Gold index gained 2.46%. These shares also lifted the All-share index 0.53% to 51 562 points and the Top 40 index 0.59% to 45 380 points.

Resources shares did not get any support from precious metal prices or the rand, but regained some upward momentum as investor sentiment improved.

The Chamber of Mines, which represents mining companies, has asked for an urgent order that would halt the implementation of the charter, published by the Department of Mineral Resources on June 15, it said in an emailed statement Monday. The chamber plans to follow with an application to have the charter reviewed.

READ: Chamber of Mines lodges urgent interdict against Charter

Resources and gold shares have lost almost 10% of their value over the past month as investors fear conditions in the new Mining Carter will add more than R3bn to the industry’s cost, which will make many mining companies unsustainable.

These shares improved despite a steady rand, which strengthened 0.69% to R12.83 to the dollar. A stronger rand means that mining companies earn less in rand for their commodities which are priced in dollar.

The rand is supported by fading expectations that the US Federal Reserve will hike interest rates again this year, which will keep investors keen on emerging market currencies. Investors are waiting to see if Fed chair Janet Yellen will stick to her positive economic outlook at an event later in the day.

Gold and platinum prices were also lower, but major gold and platinum producers traded higher. AngloGold Ashanti [JSE:ANG] was 2.57% stronger at R138.44 and Sibanye Gold [JSE:SGL] gained 1.55% to R18.40. Harmony [JSE:HAR] traded 1.65% firmer at R21.85.

Among the platinum producers, Impala Platinum [JSE:IMP] traded 1.57% higher at R35.06 and Anglo American Platinum [JSE:AMS] gained 1.32% to R292.22.

The big conglomerates also traded higher, with BHP [JSE:BIL] 2.66% stronger at R191.10 and Anglo American [JSE:AGL] 3.13% higher at R164.20.

The one exception was Pallinghurst Resources [JSE:PGL], which lost 7.05% to trade at a 52-week low of R2.90. Before Tuesday's trade the share was already 27.90% lower over the previous seven days.

The company announced that it now controls more than 75% of the share capital of Gemfields, the world’s biggest producer of gemstones, after Gemstone shareholders accepted Pallinghurst's offer to buy their shares.

Gemfields produces emeralds at its Kagem mine in Zambia and also mines rubies in Mozambique.

The Industrial index was only 0.25% higher, with Naspers [JSE:NPN] gaining 0.10% to R2 619.59. British American Tobacco [JSE:BTI] was 0.44% stronger at R900.00 and Sasol [JSE:SOL] 1.37% up at R364.92.

The top banking shares were all among the busiest shares on the JSE. However, prices did not move much as the Financial index lost 0.01%. Barclays Africa [JSE:BGA] was 0.88% higher at R147.50 and Standard Bank [JSE:SBK] gained 0.57% to R144.62, but FirstRand [JSE:FSR] lost 0.37% to R47.88.

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