AngloGold’s mining rights under threat over BEE ‘misrepresentation’

Sipho Pityana
Sipho Pityana

Department of mineral resources directs mining giant to ‘rectify’ its ‘noncompliance’ after complaint that it misrepresented the BEE structure it said it would implement

AngloGold Ashanti, one of South Africa and the world’s largest gold mining companies, has been threatened with the loss of its local mining rights by the department of mineral resources.

A directive issued from the department’s Gauteng district office has ordered the company to apply for the amendment of its rights, which were granted more than a decade ago.

This affects AngloGold’s West Wits mining rights, which include the enormous Mponeng mine in Gauteng, the world’s deepest gold mine.

“Please note that failure to comply with this directive may lead to the regional manager recommending to the minister the cancelling of this mining right in terms of section 47 of the Mineral and Petroleum Resources Development Act,” reads the directive.

The department has confirmed the directive.

“AngloGold has been directed to rectify the noncompliance and has ... made its submissions to the department,” it said in response to questions.

The reason for the directive is a complaint to the Public Protector that AngloGold misrepresented the BEE structure it would implement in 2006.

Declaring a proposed BEE structure became a precondition for getting so-called old mining rights converted into new order rights under the Mineral and Petroleum Resources Development Act, which was enacted in 2004.

The agreed BEE structure gets recorded in the mining right document.

Mineral Resources Minister Gwede Mantashe has the discretion to accept or reject the application AngloGold has been ordered to make.

Allan Reid, the head of the mining law team at Cliffe Dekker Hofmeyr, however, said it was unlikely that an amendment to AngloGold’s rights would be refused unless the actual structure implemented inherently fell short of BEE requirements.

If it was rejected, a court case would almost certainly follow, he told City Press.

He also said he was not aware of this kind of directive – to amend a right due to the BEE structure – being issued before.

AngloGold told City Press that it had duly submitted an application to amend the problematic clauses in its mining right.

AngloGold spokesperson Chris Nthite said: “We were also requested to provide certain information and we have provided the requested information. We have fully complied with the directive.”


Back in 2006, AngloGold’s new mining rights read that the company would create an employee share ownership scheme that would have 6% of the company’s local assets, which took the form of about 2% of the international group’s issued shares.

In reality, it gave workers 4.5% and the balance of 1.5% went to a company called Izingwe Capital, which is largely owned by AngloGold chairperson Sipho Pityana.

This structure was widely publicised in press releases, and AngloGold always correctly reflected it in its public financial reports.

However, the department of mineral resources has now decided that the structure contravenes the BEE scheme written into the company’s mining rights in 2006.

The AngloGold BEE structure was unwound in 2014. The shares were sold and the proceeds accrued to workers and Izingwe Capital.

“In respect of the implementation of the transaction, no error was made, deliberately or otherwise,” said AngloGold’s Nthite.


The directive stems from a complaint laid with the Public Protector, said the department.

It said: “The department of mineral resources was responding to the request from the Public Protector and made it clear to AngloGold that the investigation was a result of a complaint by minorities lodged with the Public Protector.

“It must be noted that, as a chapter 9 constitutional institution, if the Public Protector requires the department to conduct an investigation over a company it regulates, the department shall execute that instruction.”

According to the department, AngloGold had offered to rather respond directly to the Public Protector, but the department insisted that there should be a response to its own directive separately from submissions the Public Protector could request.

The original complaint to the Public Protector came from an aggrieved former employee, AngloGold’s vice-president of sustainability for the South African region, Simeon Moloko, who would have been responsible for BEE reporting, among other things.

When contacted by City Press, Moloko confirmed that he was the person who referred the complaint.

He is simultaneously pursuing a labour dispute with AngloGold after allegedly suffering a constructive dismissal – a legal term for being forced to quit due to unbearable employment conditions.

His labour complaint is essentially that he and other black executives have been denied fair promotions to the benefit of their white counterparts.

In addition to this, he reported the alleged misrepresentations around the BEE scheme alongside allegations that Pityana, who was allegedly irregularly included in the BEE scheme, has also benefited irregularly from AngloGold housing projects.

AngloGold responded to questions about this by pointing out that Izingwe’s success in tendering for a 56-house trial project was fully declared in that year’s financial statements, along with the fact that it is owned partly by Pityana.


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