Business

Mining companies on the warpath over BEE

2015-05-17 15:00

Dewald van Rensburg looks at government’s change of heart on black ownership of mines.

Johannesburg - South Africa’s major mining companies are on the warpath after the department of mineral resources unexpectedly pilloried them for failing to achieve the black ownership targets of the revised Mining Charter.

The targets themselves are under dispute. Just over a month ago, Mineral Resources Minister Ngoako Ramatlhodi had reached agreement with the Chamber of Mines to test rival interpretations in court – before making pronouncements about how the industry has fared 10 years after transformation targets were first set in 2004.

In a dramatic about turn this week, Ramatlhodi called a press conference at short notice to announce the numbers anyway – immediately after telling mine bosses about it.

According to Ramatlhodi, a mere 20% of the industry had reached the real 2014 target for black ownership – if you use the measurement the chamber is contesting.

The chamber claims that 100% of its members not only met but exceeded the targets, as it understands them.

The mine bosses summoned to Pretoria were clearly dumbstruck and furious.

An angry press release disputing the department of mineral resources’ numbers was drafted on the spot with journalists and delegates still milling around.

Journalists had been invited to hear about a supposed initiative to address the looming retrenchments at several major mining companies. Instead, the briefing was almost entirely about the black economic empowerment figures, which were not mentioned in the invitation at all.

The chamber claims its delegation was ambushed with the new figures. They received data in a presentation on Wednesday night and saw the press release provided to journalists just before it was handed out.

Even Ramatlhodi seemed unfamiliar with the findings, stumbling through the badly drafted statement.

“These numbers don’t make sense,” he said apologetically to journalists halfway through reading the statement.

The chamber also lashed out at the department’s seeming interference in the looming restructurings, stating it did not support journalists being invited to Pretoria to hear about it.

On Friday, at its own hastily organised press conference, the chamber released its research that painted the exact opposite picture. President of the chamber Mike Teke complained that the Department of Mineral Resources was not “fairly reflecting” all the work the mines had done.

Graham Briggs, CEO of Harmony Gold and vice-president of the chamber, added that the implied threat of revoking mining rights was putting a “dark cloud” over the industry.

By the standards of the normally hyperdiplomatic public lobbying of the chamber, this can be seen as a declaration of war.

Declaring the industry’s transformation a failure sets a combative tone for the imminent renegotiation of the Mining Charter to produce a third version with new five-year targets, which is meant to happen this year.

It is now clear that only the chamber wants the court to interpret the charter.

The other major parties invited to Pretoria on Thursday morning, the National Union of Mineworkers and the SA Mining Development Association, are adamant the charter is clear and unambiguous and the chamber’s interpretation is wrong.

In the past month, something has clearly dampened Ramathlodi’s willingness to entertain the chamber.

Who says what

The gist of the Department of Mineral Resources (DMR) report is that most mines failed to achieve black economic empowerment (BEE) ownership targets.

Using the original 2004 targets, the DMR agrees that 90% of mines measured have met the target of 26% black ownership, and are on average at about 32.5%. These figures were weighted by employment to emphasise big mines over the myriad smaller ones.

The chamber says all its members have at least 26% black ownership and the average is 38%.

But that is only on the original target.

Ramatlhodi’s recent statement says only 20% of the industry has “fulfilled the full requirements of meaningful economic participation”.

The controversy stems from the 2010 amendment to the Mining Charter.

The original charter called for 26% black ownership, but the 2010 version added the major caveat that black ownership should include an employee share-ownership programme, a community group of some sort and one or more “BEE entrepreneur”.

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October 13 2019