[miningmx.com] – THE South African government was willing to take a practical approach to mining sector compliance with black economic empowerment (BEE) laws, said DRDGold CEO, Niel Pretorius, but its decision to approve the firm’s recent transaction was not “precedent setting’.
Pretorius, a trained lawyer, was commenting after shareholders approved a transaction last month in which the firm swapped empowerment partner, Khumo Bathong’s 26% stake in the firm’s Ergo gold retreatment asset for a 10% stake in DRDGold.
The transaction first had to pass muster with the Department of Mineral Resources (DMR), however. Unveiled on March 19, 2014 the transaction was finally given the green light this month, a year later.
“We had to show that the economic interest of 26% in the underlying asset was represented in the 10% stake at the top level. I think we did that and government was willing to accept the deal, but I don’t think it’s precedent setting,’ said Pretorius.
In terms of the new BEE structure, Khumo Bathong is locked in for a three year period. It was also incumbent on DRDGold to show in its submission that the BEE participation in management involvement was not diluted.
Commenting on the disputed principle of ‘once-empowered, always-empowered’, Pretorius said that in three years, once the Khumo Bathong lock-in expired, and if it chose to exit, and presuming the “once empowered, always empowered’ did not prevail, DRDGOLD would “… ensure that its empowerment partner’s exit was not to the detriment of other shareholders”.
The DMR, led by mines minister, Ngoako Ramatlhodi, and the mining sector, are jointly asking the High Court to provide clarification on whether the principle of ‘once-empowered, always-empowered’ is allowed in the mining charter, as the mining sector contends.
If the DMR’s position is supported by the High Court, it will mean that transactions concluded by a company where the BEE entity no longer exists will require fresh BEE transactions.
This will be in order to fulfill the mining charter target of 26% ownership by historically disadvantaged South Africans.
