Small miners take aim at Shabangu

2010-10-09 13:46

A document criticising the amended mining charter is calling for mineral resources minister Susan Shabangu to relinquish her position of leading transformation in the sector.

The scathing document, compiled by black economic empowerment (BEE) consultancy KIO Advisory Services on behalf of the South African Mining Development Association (Samda), accuses Shabangu of having made amendments to the ­mining charter which will further marginalise previously disadvantaged groups.

The document proposes that President Jacob Zuma should take over from Shabangu, create a new vision and plan for growth in the sector.

Nchakha Moloi, Samda chairperson, said the amended charter was largely disappointing.

“The amended charter was meant to be an improvement on the mining charter that came into effect in 2004 by clarifying certain issues and eliminating the possibility of multiple interpretations and abuse,” said Moloi.

“It was also supposed to ensure that provisions in the charter are quantifiable and monitored on an ongoing basis, and look into the charter’s inherent weaknesses and address them.”

Moloi said the charter appeared to be recognising the controversial “once-empowered, always-empowered principle”.

“The current charter talks about the recognition of consequences of previous BEE deals. Is the charter talking about the ‘once-empowered, always-empowered’ transactions? It is also not clear how the ‘recognition’ is going to be measured,” said Moloi.

The “once-empowered, always-empowered” principle implies that even if black investors sell their shares in a white-owned company, the company does not lose its BEE status.

Samda and the Chamber of Mines, the association of big mining companies, have not been seeing eye to eye on the “once-empowered, always-empowered” principle.

Samda believes that the introduction of the principle will reduce black ownership in the sector. The amended charter comes after the first mining charter, implemented in 2004, was a resounding flop which missed ownership targets.

For instance, the industry failed to meet last year’s target of 15% black ownership, transferring only 9% of its wealth into black hands.

In July, Shabangu compelled mining companies to stick to the target of transferring 26% of ownership into black hands by 2014.

The Samda document alleges that the department of mineral resources (DMR) failed to consult all stakeholders adequately before publishing the amended charter. “She (Shabangu) appears to have signed a secret deal with members of the Chamber of Mines,” it reads.

But the DMR disputes the notion that it failed to consult on the amended charter.

“The department is satisfied that the necessary consultations took place and is now focused on ­implementation of the charter.

“The amended charter makes provision for mining companies to report compliance with the charter annually, as opposed to the previous five-yearly review,” DMR spokesperson Jeremy Michaels said.

The document says the charter is also vague on how to measure and monitor net value attributable to black shareholders.

“Ownership with debt is not real ownership. True ownership is when a company has paid off its debt and there is net value,” said Duma Gqubule, the KIO founder who penned the report.

The document says the failure to monitor the implementation of BEE in mining has resulted in government being unable to cancel the mineral rights of non-compliant companies.

“Most mining companies confused the signing of a BEE transaction with the achievement of the ownership target,” it says.

“This is because the charter does not specify whether the 26% ownership target refers to net or gross value and, as a result, there is no clarity about what constitutes compliance,” it says.

“This means BEE in mining is a sham sanctioned by the minister’s department, as companies are deemed to have met the ownership targets and awarded lucrative mineral rights despite having transferred no net value to black shareholders.”

The document also bemoaned the fact that white women were major beneficiaries of affirmative action.

“The representation of historically disadvantaged groups in middle management is 51%, but this includes a huge distortion because of a 15% representation of white women,” says the report.

“Without white women, black representation is 37%.”

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