Neocolonialism by Kwame Nkrumah 1965
IT has been estimated that over 50 per cent of the foreign capital invested in Africa has been poured into South Africa. British investments probably total nearly $2,800 million and American investments closer to $840 million. A 1957 U.S. government survey of American overseas investments shows the single most profitable area was in the mining and smelting business of South Africa, whose profits are higher than from any comparable investment in the United States. The high profits can be explained largely by the cheapness of African labour. According to the 1962 Statistical Abstract of the United States, U.S. miners earn an average of $2.70 an hour, which is twenty-seven times the amount earned by South African miners.
Dominant in South Africa’s economy is the Anglo-American De Beers group, part of the empire of Harry Oppenheimer, which extends into South West Africa and Zambia, and is linked with mining companies in many other African states. The value of the empire has been enhanced by the discovery that uranium can be produced from the residues and slimes which surround old gold mines.
Extraction of uranium from gold ores and slimes has brought South Africa into the world’s leading place as a producer of uranium. The working of slimes accumulated over the past sixty years, together with those from current gold production, is helping to prolong the life of many exhausted gold mines. In 1956, 8,000,000 lb. of uranium oxide were produced in South Africa, providing exports valued at £39 million. This leaves out of account the quantities that go to the Atomic Energy Board of South Africa, with whom several of the mines have contracts. The profit made from the production of uranium oxide is running ahead of that derived from gold extraction. In fact, ‘the working profits derived from uranium extraction exceeded those derived from gold extraction on the seventeen producing mines taken together, and on five of them they actually offset working losses incurred in the production of the gold’. [South Africa, Monica Cole, pp. 313-15, Methuen, 1961. The quotation relates to the year 1955.]
Harmony Gold Mining Co. Ltd. is one of the more important gold and uranium producing companies within the Anglo American Consolidated Gold Fields’ maze of interests. Its authorised capital of £5 million has been paid up to the amount of £4,500,000. Secretarial services and offices to the company are provided by Rand Mines Ltd., a company that gives executive administrative and technical services to the South African companies of the Central Mining – Rand Mines group.
Chairman of Harmony is P.H. Anderson, a deputy chairman of Rand Mines. Other directors in common are Messrs. R. E. M. Blakeway and N. W. S. Lewin. Chairman of Rand Mines is C. W. Engelhard, who is also chairman of Rand American Investments (Pty) Ltd., and patently has a watching brief for the United States investors who more and more are infiltrating into primary materials extraction in Africa. All of Rand American’s 2,371,049 issued shares of £1 each are held by De Beers Investment Trust Ltd. (now Randsel), a wholly owned subsidiary of Rand Selection Corporation since the recent re-juggling of the Rand group. Rand American owns nearly all the preference shares and a substantial interest in the issued ordinary shares of Central Mining & Investment Corporation Ltd., as well as a substantial interest in the issued ordinary capital of Rand Mined Ltd. The American link confirms the tie-up forming the Central Mining – Rand Mines group.
Consolidated Gold Fields and Anglo American Corporation interests converge in Harmony, in which both have appreciable holdings. By the grace of the South African Government, Harmony was able to acquire undermining and mineral rights over some 8,000 acres of land, as well as freehold ownership of farms covering approximately another 10,000 acres. These holdings being rather more than Harmony could cope with, it was found profitable to sell the right to mine precious metals on two portions of its areas on lease until 1967. This right went to another Anglo American concern, Virginia Orange Free State Gold Mining Co. Ltd. Harmony’s remuneration for this friendly gesture to a sister company was a minimum £3 million payable quarterly free of interest.
Virginia Orange brings us once more into contact with the American marriage to South AFrican mining, our first example being Mr C. W. Engelhard, an American Democrat, who, as president of Engelhard Industries, refiners of precious metals in the United States, sought after steady supplies to keep his plants working. He found them in South Africa, where he linked up with Oppenheimer, and later branched out into baser metals and other fields of profit. Mr Engelhard, following Mr Oppenheimer’s inspiration, has also found a niche in the Canadian, Australian and Columbian mining industries, and distributes his finished goods in Europe through companies established in Paris, Rome and London. Mr Engelhard’s qualities as well as his services to the extension of American interests abroad are recognised in his membership of the U.S. Foreign Policy association.
With Virginia Orange we are brought near to more considerable American influence than Mr Engelhard is able singly to produce, by the association of the powerful Kennecott Copper Corporation with this gold mining and uranium extracting company. Kennecott had interests in Virginia Orange which it passed over, together with those it owned in the Merriespruit (Orange Free State) Gold Mining Co Ltd., to the reorganised concern formed in 1961 to acquire those interests. The new company bears the combination title, Virginia-Merriespruit Investments (Pty) Ltd., and the rearrangement will enable it to fulfil an outstanding uranium contract with the Atomic Energy Board of South Africa.
Mr Engelhard is a member of the Virginia-Merriespruit board by virtue of the holding directly bought into it by his Engelhard Industries of Southern Africa Ltd., and his connections with Rand Mines Ltd. and Anglo American Corporation which together with another two associates, Centramic (South Africa) Ltd. and Anglo Transvaal Consolidated Investment Co. Ltd. form the parties to the new company.
Financiers and dealers in mining and other properties in the Transvaal, Anglo Transvaal has a subsidiary, Anglovaal Rhodesian Exploration Co. (Pty) Ltd., which operates in Northern and Southern Rhodesia, its mineral prospects including coal, copper, chrome, and nickel. With capital authorised at £4,337,500, not fully paid up, Anglo Transvaal is operating on an unsecured short-term loan of £1 million from the National Finance Corporation of South Africa, a private organisation with which Anglo American Corporation’s friends of the international investment world are closely associated, including the house of Morgan, which has a substantial financial interest in Kennecott Copper. Among Kennecott’s extensive mining engagements in Africa is a 30 per cent investment in Anglovaal Rhodesian.
Primed by Morgan friends, Kennecott knows how to take care of its manifold concerns. Hence, as consideration for cession of its interests in the Virginia and Merriespruit mines, is to receive an amount of £3,500,000, payable in five annual instalments. This does not, however, sever Kennecott’s connection with these valuable Oppenheimer-Engelhard properties. For the American copper corporation will be entitled to an interest of 20 per cent up to a maximum amount of £2,500,000 on any of Virginia-Merriespruit’s net surplus that may accrue after the instalment payments on the cash consideration of £3,500,000 have been fully met. This entitlement, however, will be forfeited in the event of Kennecott taking up at a later date from the members of Virginia-Merriespruit 20 per cent of the then issued share capital.
These are the tortuous means by which financial clinches are held. It is obvious that the way is being kept wide open for Kennecott’s re-entry into the heart of the company. Meantime it can still feast at the table.
Kennecott is a foremost copper producer in the United States, whose shares on the ‘futures’ market are valued by knowing operators at around $1.48 billions, even though its present capital of 11,053,051 shares of no nominal or par value issued out of 12,000,000 authorised, have been given a stated value of only $74,806,424. The possessor of copper mines, concentrating mills, smelters, refineries, fabricating works and railways, it has smelting agreements for much of its ores with American Smelting & Refining Co., with whom it has two subsidiaries in common. American Smelting is a producer itself of copper, as well as of silver, lead, zinc and gold, in the United States, Mexico, Canada and Peru. Its interests extend to Australia and Nicaragua, and it has arrangements with Cerro Corporation, Newmont Mining Corporation and Phelps Dodge Corporation, all of whom have substantial investments in South African mining projects, including the Tsumeb Corporation of South West Africa.
The American chemical industry enters the Kennecott field of operations through a joint venture with the important Allied Chemical & Dye Corporation. The Allied-Kennecott Titanium Corporation is to produce and sell titanium metal, and has put up a pilot plant. A further break-through has been made by the acquisition of 25 per cent in Western Phosphates Inc., 7·3 per cent in the common stock of Molybdenum Corporation of America, and 50 per cent in Garfield Chemical & Manufacturing Corporation. There has been a branching out into mineral exploration in Brazil and Mexico with two subsidiaries, Kenrand Pesquisas Minerals S.A. (60 per cent Kennecott owned) and Cia. Kenmex S.A. respectively. Another subsidiary, Braden Copper Co., works a copper property in Chile.
Expansion into Canada is by way of Quebec Columbium Ltd., formed by Kennecott with Molybdenum Corporation of America to investigate a columbium property near Montreal, and Quebec Iron & Titanium Corporation, owned two-thirds by Kennecott and one-third by New Jersey Zinc Co. This latter company is linked up with the great oil organisation, Texaco Inc. in a joint enterprise, Texas-Zinc Minerals Corporation, for the construction and operation of a uranium processing mill in Utah. A uranium mine in Utah was bought in 1956 and the mill began operations in 1957, also treating ores from other mines. The uranium concentrate produced is being sold to the U.S. Atomic Energy Commission under contract. The New Jersey-Kennecott venture in Quebec Iron & Titanium is going to prove extremely valuable, as titanium is a metal that does not melt at supersonic speeds, and is accordingly in high demand for use in jet aircraft. Greece also figures in Kennecott’s sphere of interests, where its 95 per cent owned Kenbatstos Mining Co. Ltd. works asbestos properties. In West Africa, it has a 76 per cent holding in Tin & Associated Metals Ltd., operating a columbium and tin property in Northern Nigeria. Columbium from this mine provides most of the world’s present production.
Our examination into Harmony Gold Mining Co. Ltd. has led us a long way round the world and into realms of power and prodigious wealth. This seems inevitable once we begin to trace the external interests that intertwine Africa’s exploitation with that of many other parts of the world. Coming back to Harmony, it is impressive to note that this company, having a gold reduction plant capable of dealing with 200,000 tons of ore a month, also boasts a uranium extraction plant whose capacity is 120,000 tons monthly. This plant began operations in April 1955. Attached to it is a sulphuric acid plant with a daily capacity of 120 tons, which started production in January 1960.
The uranium extraction plant was erected under arrangements made with the Export-Import Bank of Washington, U.S.A., and the U.K. Ministry of Supply. A loan was obtained from the Atomic Energy Board of South Africa for the entire capital cost of the plant, exclusive of the capacity extension from 80,000 to 120,000 tons monthly. The company is under contract with the combined Development Agency, as well as with the U.K. authority alone, to supply various quantities of uranium at fixed prices, under arrangements which will allow it, without incurring extra cost, to cover by June 1965 the capital expenditure on plant.
During the year ended 30 June 1961, Harmony milled a total of 2,116,000 tons of ore, which yielded 857,794 oz. of fine gold, providing a working revenue of £10,810,496, with a working profit of £4,090,677; 2,067,100 tons of slimes treated yielded 974,349 lb. of uranium oxide, giving an estimated working profit from uranium, pyrites and acid of £2,680,233.
Accounts for the following six months to the end of 1961 showed that 2,285,000 tons of ore milled resulted in a working revenue from gold of £4,458,177. Treatment of 2,138,300 tons of slimes produced 953,100 lb. of uranium oxide, giving a working profit from uranium, pyrites and acid of £2,284,647. For the working year 1961-62 the dividend paid was 56 per cent. Net profit for the year 1960-61 was £6,674,739, and dividends paid accounted for £2,497,500. All this can be regarded as most satisfactory for shareholders on a fully paid up capital of £4,500,000.
Messrs. Engelhard and Oppenheimer must bear a special regard for their friends in the Export-Import Bank for their ready aid in this venture, in a country that makes a mockery of human rights for its non-white inhabitants. Such ease of assistance, if extended to the less developed new nations of the continent by an international banking organisation, would help lessen the gap that the developed countries are forever depreciating but which, by these stealthy means, they serve to widen between the ‘have’ and ‘have not’ countries.