Wider sanc­tions com­ing for min­ing com­pa­nies

CityPress - - Business - SU­SAN COM­RIE su­san.com­rie@city­press.co.za

Govern­ment’s headache as­so­ci­ated with un­trans­formed min­ing com­pa­nies could be a thing of the past, ac­cord­ing to the depart­ment of min­eral re­sources’ deputy di­rec­tor-gen­eral, Mosa Mabuza.

Mabuza, who was speak­ing on the side­lines of the IHS En­ergy SA Coal Ex­ports Con­fer­ence in Cape Town this week, said the amended Min­eral and Pe­tro­leum Re­sources De­vel­op­ment Act would give his depart­ment tougher tools to deal with “grossly non­com­pli­ant” min­ers in terms of BEE tar­gets.

The amended act, which is likely to be fi­nalised dur­ing the course of this year, al­lows the depart­ment to im­pose fines up to 10% of a com­pany’s turnover to pun­ish the most er­rant min­ing houses.

“I don’t think our in­ten­tion is to in­tro­duce a big­ger stick, but for the in­dus­try to think twice be­fore they pro­ceed with grossly non­com­pli­ant [prac­tices],” said Mabuza.

“Some of the time, we were told by some of the com­pa­nies that, ac­tu­ally, it’s cheaper to pay the [R500 000] fine than to be com­pli­ant – and when you think about it, they were not wrong. And so we think it is a Panado for that kind of headache.”

Ac­cord­ing to the depart­ment, 90% of weighted min­ing com­pa­nies – a mea­sure that gives more weight to big­ger com­pa­nies – meet the 26% em­pow­er­ment tar­get fig­ure.

But in deal­ing with the re­main­der, Mabuza said the depart­ment needed a more nu­anced range of sanc­tions. “Be­fore, we were mov­ing from R500 000 to tak­ing your li­cence away, and we think it was too much of a quan­tum leap from the fine to a sec­tion 47 [the re­vo­ca­tion of a li­cence],” he said.

“We’re just nor­mal­is­ing the grad­ing scale. We are not say­ing, ‘you are non­com­pli­ant, so we are go­ing to hit you with a 10% fine’ – there are mech­a­nisms that in­crease all the way to 10%. For you to be fined 10%, you’ve got to be grossly neg­li­gent and not wor­thy of the min­ing right we have given you.”

How­ever, one of the most con­tentious is­sues MIN­I­MUM BEE RE­QUIRE­MENT FOR MIN­ING COM­PA­NIES of the amended act is the prin­ci­ple of “once em­pow­ered, al­ways em­pow­ered” and whether com­pa­nies that pre­vi­ously con­cluded ac­cept­able BEE deals but are now less than 26% black-owned should be pe­nalised.

Roger Bax­ter, CEO of the Cham­ber of Mines, said: “The 26% that was agreed to in the Min­ing Char­ter in 2002 was agreed on the ba­sis of cre­at­ing a crit­i­cal mass of BEE that would be­come self-per­pet­u­at­ing – it would feed off it­self.

“The fact that you may have some black en­trepreneurs who saw that the share price was right, sold out and went into hos­pi­tal­ity or retail or bank­ing, shouldn’t make the ex­ist­ing min­ing com­pa­nies vic­tims of the min­ing in­dus­try pro­mot­ing the suc­cess of black en­trepreneurs,” he said.

“If the com­pany has done noth­ing on trans­for­ma­tion, then that’s one thing. But if the com­pany achieved 26% and then the BEE share­holder sold out, that com­pany acted in good faith, and that com­pany should not be pe­nalised for do­ing so.”

Last year, the depart­ment and the Cham­ber of Mines ap­proached the courts to ask for a declara­tory or­der on this ques­tion. The case is ex­pected to be heard this year.

Un­til then, how­ever, sev­eral coal an­a­lysts have said the pol­icy un­cer­tainty around BEE has been hurt­ing in­vest­ment in min­ing.

Con­tribut­ing to this un­cer­tainty is the fact that while the act re­quires 26% own­er­ship, power util­ity Eskom has made it clear it will only en­gage in con­tracts with com­pa­nies that are more than 50% black-owned.

Depart­ment spokesper­son Martin Mad­lala as­sured del­e­gates at the con­fer­ence that Min­eral Re­sources Min­is­ter Ngoako Ra­matl­hodi was fo­cused on get­ting the act fi­nalised as soon as pos­si­ble so that the in­dus­try could have clar­ity on the is­sue and plan its in­vest­ments ac­cord­ingly.

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