BEE status for mines

2016-07-13 06:00
JOHN MOPHETHE

JOHN MOPHETHE

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Question:

I OWN a mining company. In 2004 we sold a 26%-stake in our company to a black entrepreneur in order to meet the requirements of the Mining BEE Charter. The same partner recently decided to sell his shares back to us, which means we have lost our BEE ownership.

I have, however, heard of the principle of “once empowered, always empowered” applying in the mining sector. Is this true and will my company still be recognised as having BEE ownership?

Answer:

The so-called principle of “once empowered, always empowered” refers to the situation where a mining company, after the exit of a black partner that held a stake in the company as a result of a BEE transaction, continues to be recognised as being BEE-compliant in order to retain its mining rights, despite losing its black ownership due to such exit.

The original Mining BEE Charter introduced this principle. Subsequent amendments to the Mining BEE Charter became silent on this principle implying its removal, but left the situation unanswered as to how companies that had been empowered, but lost their empowerment partners prior to the amendments should be dealt with.

This uncertainty has left companies that have lost their BEE partners prior to the 2010 amendment with the dilemma of having to decide whether to seek other BEE partners or stick to the “once-empowered, always-empowered” principle.

This matter is the subject of a current case in which the court is asked to clarify this principle.

In April this year a revised BEE Mining Charter was published for comment.

The draft charter specifies that the black ownership target of 26% must be maintained throughout the life of the mine and that at least 5% of the shares must be distributed equitably between workers, black entrepreneurs and community members.

There must also be a BEE transaction for each mining right granted and a special purpose vehicle created for each empowerment transaction.

The draft appears to clarify the uncertainty and unequivocably requires that black shareholding must be maintained, thereby effectively terminating the “once empowered, always empowered” principle for all mining companies.

If the draft charter in its current form becomes law, it would moot the outcome of the above-mentioned court case.
John Mophethe, Director, Phatshoane Henney Attorneys

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