Court to decide on black ownership after ‘deep divisions’ emerge

2015-04-05 15:00

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Minister refers issue of black ownership of mines to high court after ‘deep divisions’ emerge during Mining Charter review

There will be more than two “correct” definitions of black ownership in the mining industry vying for approval in the courts this month.

The media was invited to Pretoria this week to receive the long-awaited review of the mining industry’s compliance with the Mining Charter after the 10-year deadline for its targets had passed last year.

Instead, Minister of Mineral Resources Ngoako Ramatlhodi made the surprise announcement that the North Gauteng High Court would be asked to decide on the correct measure of the 26% black ownership target after “deep divisions” about the correct method emerged during the review.

He said at the press briefing that the main issue was whether the contentious “once empowered, always empowered” rule supported by the major mining companies in the Chamber of Mines is legitimate.

He was referring to situations where a black partner took a stake in a mine, but lost the shares or sold them for whatever reason.

While the mine no longer had the black shareholding, the Chamber of Mines insists the historic deal should still count towards the 2014 target.

Practically, the issue covers several scenarios.

They include the possibility that the black partnership could have folded due to the weaknesses of the deal, or to economic reasons beyond anyone’s control, or the partners could have sold out and taken the money.

Many BEE deals involve the sale of entire mines. This leaves the mining company with no black shareholding despite a major contribution to the black ownership of mining assets.

However, according to the other parties at the table, that is not necessarily the most important question.

The National Union of Mineworkers (NUM) and black mine investors in the SA Mining Development Association (Samda) have competing criteria they want included in the court application, which is meant to be complied with collaboratively by everyone involved this week.

Ramatlhodi said he wanted the urgent court application finalised in time to get a firm answer by the end of the month.

Samda wants the old question of whether shares laden with debt can be counted as real black ownership to be answered as well, its chairperson Peter Temane told City Press.

“Once empowered, always empowered is one question. What about debt? Everything about ownership has to be part of the court application,” said Temane.

Samda views only “unencumbered and debt-free” ownership as real ownership.

The NUM says only mining companies with employee share schemes and community share trusts as part of their BEE shareholding can be considered to have complied with the 26% target, despite other black shareholding they have.

That is the definition of “meaningful participation” adopted in a 2010 amendment of the Mining Charter, said Luthando Brukwe, head of the NUM’s transformation unit.

According to the NUM, only 9% of mining companies have 26% black ownership that also meet these criteria.

The number apparently stems from the new contested review, which the minister has not made public.

Apart from insisting on these additional criteria, the NUM and Samda are also opposed to the “always empowered” rule.

“Our view is clear. Historical transactions don’t matter. It has to be the current structure,” said Brukwe.

Temane said the “intent of the law” was that ownership should be at 26% on the target date.

“You cannot say it used to be that ... it is about the situation on the deadline day.”

The Chamber of Mines’ chief operating officer, Roger Baxter, told City Press that the idea of “perpetual lock-ins” for black shareholders defeated the purpose of empowerment laws.

“The difficulty with this is that it doesn’t create the black capitalist class that can go into other sectors if it chooses,” he said.

Asked about the practical consequences if the court decided against the “once empowered” rule, Ramatlhodi this week suggested that mines would practically be forced to refinance BEE deals to re-establish 26% black ownership.

“The charter is clear. Black ownership should not be compromised.”

If the court endorses an interpretation that makes companies noncompliant with the charter, they will have to address the shortcomings or lose their mining rights, he said.

Ramatlhodi said an urgent court application would be the quickest and least acrimonious way to decide who was right. If he simply imposed his view, the matter would inevitably end up in court anyway, he told journalists.

At the same time, it is very unlikely that the chamber will not appeal an outcome that could cost its members billions in the form of renewed obligations to bring in empowerment partners.

The same goes for Samda and the department of mineral resources.

“I can’t guarantee there will be no appeal ... We will have to manage that outcome. From my side, I will have discharged my responsibilities,” said Ramatlhodi.

His decision seems calculated to avoid the political storm that erupted five years ago when his predecessor, Susan Shabangu, unveiled the first interim review of the Mining Charter.

Back then, Shabangu released a report claiming that black ownership stood at 9% “at best” against the 2009 target of 15%.

This provided the crucial fuel for the nationalisation campaign, which was to a large extent driven by Samda and made Julius Malema a household name.

Samda has since been claiming that the real value of black ownership is less than 3%, using a contentious method focused on JSE shareholding and only counting “net value” after debt.

The old Crown Mines dumps south of Joburg. Picture: Elizabeth Sejake

What do we know?

Apart from the disputed mining ownership figures, Ngoako Ramatlhodi did release preliminary numbers for other targets in the Mining Charter.

Unfortunately, they don’t reveal much.

The industry’s progress with everything from converting hostels into family units to employment equity at management level are only given as a “percentage of right holders who comply”.

While 63% of right holders who had hostels have converted them, there is no distinction between a colossal mine like Sibanye Gold’s Driefontein and the many small marginal mines that still exist.

Thibedi Ramontja, director-general of the department of mineral resources, told journalists that weighted results could be made available later when the final results are published at the end of this month.

While the ownership question goes to court, the parties will be finalising the review of the other Mining Charter targets.

Although Ramatlhodi claimed that everyone “mostly agrees” on how to measure these charter targets, Peter Temane told City Press there were issues to iron out around procurement from black companies and possibly housing as well.

The Mining Charter

The Mining Charter was the country’s first major empowerment charter and was drafted alongside the democratic era’s overhaul of mining laws through the Mineral and Petroleum Resources Development Act of 2002, which came into operation in 2004.

Together the two documents were meant to implement the Freedom Charter’s call that mineral resources be owned by the “people as a whole”, meaning owned by the state.

The act abolished the private ownership of minerals in South Africa.

Now mining companies “lease” the minerals they mine from the state subject to conditions set out in the charter. Apart from the ownership target, they include targets around housing, procurement, employment equity and community development.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24


Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.