I share this article due to the relevance to black empowerment and the mining charter. it seems that the 26% is the accepted bee empowerment ratio. with the amended codes deal with this issue where it states that an empowerment deal will be valid for 3 year after the Bee shareholder pulled out to enable the entity to find another bee partner. it also emphasis the fact that an empowerment deal must be approached with caution with all checks and balances in place. again it should be noted that development is a process, not an event, and changing circumstances will not defer the objectives of the codes
SUNDAY TIMES BUSINESS BY LUTHO MTONGANA, 2016-03-20
BEE miners hamstrung by exit rules
Sipho Nkosi, the outgoing CEO of Exxaro, believes a lack of clarity regarding the Mining Charter's requirement that black shareholding be maintained at a minimum of 26% is a major concern for investors - black and white - in the sector.
Image: IHSAAN HAFFEJEE
Now, more than a decade after the first draft of the charter - the first attempt by a South African government to transfer some of the ownership of the major industries to black shareholders - there are still major mining houses that are nowhere close to the 26% black shareholding required.
The industry believes "once empowered, always empowered" should apply to mining houses that entered into transformation deals in the early years, arguing that blame for the poor performance of markets or black swan events such as the global recession cannot be laid at the door of these companies.
Over the past 15 years, R205-billion has been spent, primarily on equity ownership deals in mining.
However, the Department of Mineral Resources insists that mining companies maintain the stipulated black ownership - regardless of whether black shareholders choose to move their investment elsewhere.
Companies such as Gold Fields and Northam Platinum signed empowerment deals with Tokyo Sexwale's one-time mining vehicle Mvelaphanda Resources that have collapsed in the aftermath of the crash in 2008 of the financial sector.
In 2004 Gold Fields entered into a BEE deal in which Mvelaphanda Resources acquired 15% of the mining company's assets. The agreement was for five years but in 2007 it collapsed due to market conditions.
I understand where the white people are coming from - I also think it is the wrong model
The mining house undertook another BEE deal three years later, this time a controversial one, with ex-con Gayton McKenzie forming a consortium that included some senior ANC members including Baleka Mbete.
The deal was scrutinised by New York's Securities Exchange Commission, where Gold Fields securities are listed, because of potential corruption. Last year, however, the company was cleared.
The man who for the past 10 years has run perhaps the country's most successful empowerment project believes the requirements of the charter need to be clarified in court.
The problem with black empowerment deals and the stipulation that black ownership remain at a minimum of 26% was that companies needed to hand out a new stake every time they lost it, leaving the company's owners with nothing because their shares had been "eaten up" by black shareholders who had left the business, Nkosi told Business Times.
"I used to be president of the chamber and I know that the majority if not all [mines] have complied with the law," said Nkosi, who was vice-president of the Chamber of Mines in 2007, and president in 2008 and 2009.
"[But] what happens to the owners of the business? The guys who funded the whole thing? It just doesn't make sense," he said.
"I understand where the white people are coming from - I also think it is the wrong model."
It would be equally unfair to prevent a shareholder from disinvesting because of the transformation policy.
If sustaining black ownership at a minimum of 26% was a cornerstone of the attempts to redress the wrongs of the past, then a clear policy in this regard had to be developed and implemented .
The law needed to clearly state whether the requirement applied in perpetuity.
"If you want those people to be there in perpetuity you are discriminating against that shareholder," said Nkosi. White shareholders were not similarly constrained.
Chamber CEO Roger Baxter said the issue required clarification, especially since "regulatory concern is a major concern for investors".