An­gry up­roar over BEE in min­ing sec­tor

Finweek English Edition - - COVER - BY TINA WEAVIND

depart­ment of min­eral re­sources (DMR) threw the min­ing in­dus­try into a fresh state of alarm when it re­leased the woe­ful find­ings of the gov­ern­ment’s BEE au­dit, mea­sur­ing the level of black em­pow­er­ment that the in­dus­try has achieved over the past decade.

Ngoako Ra­matl­hodi, the min­is­ter of min­eral re­sources, in­di­cated at the re­lease of th­ese find­ings ear­lier this month that should th­ese quo­tas not be met − or an ac­cept­able ex­cuse not be forth­com­ing − min­ing rights could be with­drawn.

The coun­try has around 1 000 min­ing rights hold­ers of vary­ing sizes.

Even though the Cham­ber of Mines − rep­re­sent­ing busi­ness − and gov­ern­ment have been work­ing with the same data from min­ing com­pa­nies, the num­bers each put out were com­pletely dif­fer­ent.

While Ra­matl­hodi said that just 79% of min­ing com­pa­nies had met the 26% own­er­ship tar­get for black in­vest­ment, the Cham­ber said that it was “firmly of the view that 100% of its mem­bers” had achieved the tar­get laid down by the 2004 Min­ing Char­ter.

How­ever, one of the main rea­sons for the Cham­ber’s fu­ri­ous re­sponse at the re­lease of the data was that it and the DMR are cur­rently in a legal dis­pute about the in­ter­pre­ta­tion of the own­er­ship el­e­ment of the char­ter.

Af­ter the last Min­ing In­dus­try Growth Devel­op­ment and Em­ploy­ment Task Team (Migdett) meet­ing in March, the two par­ties agreed to go to court to work out a mid­dle ground on the is­sue. This was on con­di­tion that un­til this had been rat­i­fied nei­ther party was to re­lease its data.

The DMR’s in­ter­pre­ta­tion of the char­ter is that mean­ing­ful eco­nomic par­tic­i­pa­tion has to in­clude the three cat­e­gories of his­tor­i­cally dis­ad­van­taged South Africans, the com­mu­nity and work­ers. The Cham­ber of Mines, how­ever, says that th­ese ex­tended de­mands can’t be is­sued ret­ro­spec­tively to com­pa­nies that had al­ready fulf il led their em­pow­er­ment man­dates.

An anal­y­sis by au­dit­ing firm SizweNt­salubaGo­bodo and Rand Mer­chant Bank cor­po­rate fi­nance demon­strated that the in­dus­try had “met and ex­ceeded its own­er­ship tar­get of 26% [of his­tor­i­cally dis­ad­van­taged South Africans] by 2014”. The Cham­ber said that over 12 years, th­ese trans­ac­tions had cre­ated a net value of be­tween R155bn and R282bn, which is equal to 25% to 46% of the en­tire in­dus­try value.

The Cham­ber main­tained that the gov­ern­ment was “shift­ing the goal­posts mid­stream” and was “in­cor­rectly [ac­cus­ing] the in­dus­try of non-com­pli­ance”. This was both “dam­ag­ing to trust and in­vest­ment in the min­ing sec­tor,” it said.

Re­ac­tions by unions also in­di­cated deep divides in the in­dus­try. Amcu, the big­gest union in the plat­inum sec­tor, did not even at­tend the Migdett meet­ing on 15 May.

Gideon du Plessis, gen­eral sec­re­tary of Sol­i­dar­ity, walked out of the meet­ing. Du Plessis told Finweek that he was “so damn an­noyed with the process. I could not sit with a straight face as if I con­cur with what was said.”

The “be and end all” of the meet­ing were the char­ter re­sults. “We can’t zoom in on the re­sults [...] Rome is burning,” Du Plessis stated.

Du Plessis said that, dur­ing the meet­ing, he had en­coun­tered a lot of hos­til­ity and no sup­port for say­ing that while trans­for­ma­tion was vi­tal, what was needed im­me­di­ately was to cre­ate in­dus­try sus­tain­abil­ity. While re­source prices could not be con­trolled, “let’s con­trol what we can”. This would in­clude is­sues like power prices, labour re­la­tions, health and safet y, re­dun­dancy pro­cesses and the rule of law, he said.

NUM d e p u t y g e n e r a l sec­re­tary Tshi­mane Mon­toedi said that the non-com­pli­ance by the min­ing in­dus­try posed a se­ri­ous threat to the econ­omy, and that the DMR had a re­spon­si­bil­ity to en­force com­pli­ance.

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