Miners in spin as DMR discounts pre-2004 BEE

[miningmx.com] – A TEMPLATE issued by South Africa’s Department of Mineral Resources (DMR) aimed at guiding mining firms with respect to compliance with the country’s empowerment legislation has excluded transactions before May 1, 2004.

Two independent sources told Miningmx that excluding transactions before this date would have an effect on the BEE qualifications of several large mining houses including Anglo American.

Theoretically, the South African government has the ability to suspend mining licences if miners fail BEE, although the practical problems associated with this would probably be a major deterrent.

May 1, 2004 represents the date of promulgation of the Mineral & Petroleum Resources Development Act (MPRDA) which now houses the mining charter. The date is also referred to in the charter itself as commencement of BEE although one lawyer argues this would overlook the MPRDA’s transitional provisions.

The Chamber of Mines could not be contacted for comment at the time of writing. Phuti Mabelebele, spokesperson for the DMR said she would look into the matter. “The charter compliance template was previously agreed with the Chamber of Mines,” she said.

The discrepancy in views regarding criteria for qualifying empowerment deals would appear to be behind comments made by Anglo American CEO,Mark Cutifani, last week in which he said it was “crazy” for certain transactions to be discounted.

“There are concerns on some definitional issues that are being discussed between the chamber and the DMR. It is a very important conversation,” he said.

“If I go back in time and use experience from a previous life, Anglogold Ashanti made a number of [BEE] entities in the gold mining industry; it created many of the home grown champions in the country.

“The DMR needs to understand what a business is and if this is not done, then it is a ridiculous exercise,” he said.

The mining charter is a checklist providing for issues such as ownership for historically disadvantaged South Africans, social and labour plans, procurement and employment equity among others.

A source told Miningmx that the CoM convened an urgent council meeting yesterday in order to discuss the difference of opinion between itself and the DMR on qualifying criteria for BEE. “Apparently, there was an urgent council meeting yesterday and everyone is in a bit of a panic,” the source said.