Empowerment talks go beyond the mines

THE “once empowered, always empowered” dispute between miners and the state was always going to be a sensitive one, laced with distrust between the two battering rams.

Given the mechanism used in the funding of the initial empowerment transactions in the sector, it was inevitable that we’d find ourselves in this position at some point.

Either the empowered consortium would sell its stake in a mining company to realise value as any rational investor would, or sell shares to pay back the debt made to purchase the shares.

What else would banks use as security but those very same shares, given that most black investors included in these broad-based consortiums didn’t have assets such as property to back these loans?

We shouldn’t be surprised that we are here.

Whatever the outcome of the talks, it will feed into the rest of the economy, across sectors. Over the past decade, we’ve seen one too many empowerment deals melt into handsome fees for lawyers and generous profits for banking dealmakers, and very little for the intended beneficiaries.

There’s much that mainstream business has to answer for in this transformational project, such as the chosen partners, which in the main seem political rather than business partners.

This conversation over “once empowered, always empowered” is much bigger than just one between miners and the government.

The former mining minister’s idea to leave it to the law to make a call was his attempt at drawing a line under the matter. It was one of the reasons there wasn’t much internal opposition to the president’s surprise decision to axe him.

Were the law to rule against the government, what would it have meant to the empowerment project?

So perhaps it is better that the industry and the government continue these sensitive talks, outside chambers.

They are by their nature sensitive, and understandably so. Nonetheless, a conversation we should have, although the timing could be better.

The reason being that whatever the outcome, messy or not, it will impact on S&P’s rating decision in December.

The ratings agency has highlighted it along with labour reform as a risk to our rating. It is the body that keeps the fate of the economy on a knife edge; just how the industry settles this matter will carry much sway in whether we sink into “junk” status.

On the two issues, S&P said: “We see risks that negotiations between the government, private sector and unions could become protracted and, even if concluded, implementation could be nettlesome.”

It said in its report that it understood that rules around labour and commodities were contentious in most countries, and “even more so in South

Business has to answer for much in this transformational project

Africa, given the historical legacy of apartheid”.

So over the next six months, the agency that has us just one notch above junk will be paying close attention to the performance of a novice mining minister dealing with rather irritated mining CEOs such as Neal Froneman, whose ever- expanding Sibanye is perhaps most exposed to an unfavourable outcome for miners.

It’s too late to kick these talks down the road until after December, or until the economy stages a strong recovery — they are in focus now.

Perhaps they could have come at a better time. But maybe there’s a chance to deal with the core question about empowerment — its sustainability.