[miningmx.com] – SOUTH Africa’s mining sector will decide by the end of the month if it will test objections it has to the government’s charter compliance audit in court after a number of companies run the risk of failing it.
An industry source said that contrary to earlier reports, the government will accept black economic empowerment (BEE) deals concluded before the 2004 promulgation of the Mineral & Petroleum Resources Development Act (MPRDA).
However, the government has not accepted the once-empowered, always-empowered principle after the promulgation of the MPRDA in May, 2004.
This means that a number of transactions where BEE partners have sold shares, or where the BEE entities no longer exist, would fall foul of an audit report which is being written by the Department of Mineral Resources (DMR).
The report is due to publication towards the end of the month and it is expected the industry, as represented by the Chamber of Mines, will make a decision on whether to oppose the DMR’s position in court.
Mining companies that sold shares to Mvelaphanda Resources, for instance, may not have their empowerment credits in terms of the ownership recognised by the DMR.
Harmony Gold, which sold shares to Mzi Khumalo which were subsequently encumbered in a debt-raiser by Khumalo may also fail the audit.
There’s also the issue of BEE credits claimed through the creation of employee share option funds or ESOPs where the beneficiaries have either retired – and been paid out – or they have passed away.
Sibanye Gold, which claims BEE ownership through the sale of shares at asset level in the Driefontein, Kloof and Beatrix mines when they were owned by Gold Fields, said it was “confident” of its empowerment status.
The passage of ownership in that deal, however, is a prime example of the complexity facing the DMR as it attempts to sift the sands for good empowerment deals.
The shares in the mines were subsequently converted into holding company level once the debt had been repaid and were used by the BEE beneficiaries to buy shares in other BEE transactions such as buying shares in Northam Platinum.
Northam, however, was recently forced to re-empower itself after its BEE partners ‘sold’ their shares to their banking partners in order to cover the initial debt.
