Mining companies should maintain 26 percent black ownership of their assets in the country or risk losing their operating licences, Mineral Resources Minister Ngoako Ramatlhodi warned yesterday, as the December deadline looms for compliance with the mining charter.
The mining charter, enacted in 2004, compels operators to sell 26 percent of their local assets to black South Africans by the end of this year as a way to compensate for discrimination during apartheid rule. A number of investors that acquired the black empowerment stakes at discounts subsequently sold them, diluting the companies’ black shareholdings.
The Department of Mineral Resources has previously said it was conducting an audit on compliance by the mining companies, which is expected later this year.
It was conducting routine inspections and where there was non-compliance, directives and orders would be issued for the right holder to rectify shortcomings within stipulated timeframes. The minister could cancel or suspend the right, in terms of section 47 of the Minerals and Petroleum Resources Development Act, should the companies not take steps to rectify their non-compliance.
A number of black investors that acquired empowerment stakes in mines at discounts subsequently sold them, diluting the companies’ black shareholdings.
Ramatlhodi said he did not accept the “once-empowered, always-empowered” argument put forward by the mining companies, which had committed to a minimum black shareholding. “I don’t subscribe to that because it defeats the spirit of transformation,” he said in Cape Town yesterday.
“There are people who are historically excluded and these people happen to be a majority. They should have a say in what happens to their minerals.”
But the mining sector has raised the possibility of the Constitutional Court being called in to settle key areas of conflict as the granting of mining rights is based on compliance with or plans to meet these aspects of the charter.
The relevance of the current mining charter has been questioned by industry players, who have pointed out that R300 billion of equity deals have been completed in the mining sector, and that it was not feasible to ask for more.
While a government-commissioned study from mid-2008 found just 9 percent of the industry was black-owned, its findings were rejected by the Chamber of Mines, which represents the country’s main mining companies, including Anglo American and BHP Billiton. A new analysis is under way to reassess compliance with the charter.
“Ultimately we do have as our whip the withdrawal of licences and we will use that if the need arises,” Ramatlhodi said. “We will do everything possible to avoid that eventuality, but definitely, if it’s unavoidable, that should happen and will happen.”
About 79 percent of South Africa’s population is black, 9 percent white, 9 percent of mixed race and 2 percent of Indian or Asian origin, according to the government statistics agency.
“Just to be clear, at any given time companies must comply with 26 percent black economic empowerment,” Deputy Mineral Resources Minister Godfrey Oliphant said. “Whatever they sell and whatever they do, 26 percent must remain in the hands of indigenous people. It’s in the interest of companies to comply.” – Bloomberg, with additional reporting by Dineo Faku