Nkosi asks whether SA miners “acted honestly” in BEE deals

Sipho Nkosi

FORMER CEO of Exxaro Resources, Sipho Nkosi, has questioned whether the South African mining industry has “acted honestly” in its efforts to implement black economic empowerment (BEE) adding that it had benefited middlemen.

“I question whether the industry has acted honestly. There have been R300bn [BEE] deals in last 12 years, but in terms of change in South Africa, you don’t find anything,” he said.

“That is a big cost to us as an industry. You said you did the big deals, but only ones making money from it is the lawyers and finance houses,” he added.

Nkosi, who is now chairman of a start-up investment management company, Talent10 Holdings, was speaking at a Joburg Indaba presentation in which delegates discussed ‘The Cost of Mining in South Africa’.

Nkosi was instrumental in the creation of Exxaro Resources, a black-controlled company which also provided BEE credits to Kumba Iron Ore through its 19.99% stake in the iron ore producer, controlled by Anglo American.

He also called on the South African mining sector to ensure “our voices are heard” requiring participants to be “more proactive” and less reactive. “We need to lobby more and we need to clarify what we mean when we criticise legislation”.

His comments come amid growing public discontent among the mining sector with the government led by the increasingly under-fire South African president Jacob Zuma.

In an interview with Bloomberg News at the Denver Gold Conference on September 19, Sibanye Gold CEO, Neal Froneman, said it was time for Zuma to go as questions about his governance was deterring new investment in the country.

Sipho Pityana, chairman of AngloGold Ashanti, said last week said Zuma had “no integrity” and his actions are putting South Africa at risk of a credit-rating downgrade to junk.

Nkosi was replaced at Exxaro by Mxolisi Mgojo who said at a media lunch last week that he would be joining a 40-person strong mission to the US in October aimed at tackling issues such as future investment in South Africa.

“It will be a tough job and we’ll have to play ‘rope-a-dope’ but we must continue to believe in the future of our mining industry,” said Mgojo.

COURT BATTLES

Speaking at the Jo’burg Indaba breakfast, DRDGold CEO, Niel Pretorius, said the mining sector should defend itself more robustly against illegal action by taking its complaints to the courts.

“We have indulged illegal behaviour in our labour relations when unions embarked on unprotected strikes,” he said. “Once we started to allow that to happen, the certainty regarding labour relations went out of the window.

“It led to anarchy in certain areas,” he said.

6 COMMENTS

  1. Did mining firms “act honestly” in BEE deals?
    Other questions to ask in tandem:
    Were mining firms put into an intolerable position by demands to implement policy, to follow DMR directives as to the persona who should participate, instead of strictly law?
    Is the DMR “acting honestly” and “efficiently” in applying said laws? Why is there so much litigation?
    Have the laws/ policy had the desired effect, and if so, why is the South African industry on its knees?
    Are “communities” socially cohesive social units, or are they a series of rent-seeking opportunists organised into cliques, each attempting to establish dominance?
    Why does government not ensure that these communities are properly constituted and administered as per democratic principles?
    All in all, a silly statement.

  2. David
    Very much confusing to pick up snippets from different interview and make it one story. Because for one, we need to understand the context within which different people you have quoted in your article relates to. I would rather comment on Sipho’s purpoted comments, for it deserves to juxtaposed in the current once empowered always empowered context.

    Sipho is correct to indicate that only lawyers and finance house benefit from this BEE transaction. Most of the so called BEE transaction actually benefit the previous disadvantaged and true beneficiaries of the intention rather end up with huge debt and nothing to write home about. Maybe it’s time to look into this model and see how best we can address the past imbalances without crippling the industry.

    We thus need an industry committed to transformation and social reengineering, enabling government and investors willing to trust thier money on people with actual technical capacity to execute multi billion rand investment for the future of our country and economy bar the race.

  3. As far as I can recall Mr. Nkosi became a multi millionaire as a beneficiary of these dubious BBBEE deals that he was fortunate enough to be part of. Social reforms are the responsibility of Government, not of mining companies. Instead of stealing the money and enriching themselves, Government should be providing housing, schooling and infrastructure developments.

  4. BEE, or reverse apartheid, is apartheid – and doomed to failure. Who today will invest in race based investments – no one. Capital is free to invest anywhere in the World where it can get the best return. Mining is capital intensive – no new investment – no mining .. and by extension no industry. Rule of law – free movement of labor – best candidate gets job – period. Wake up SA!!

  5. No real grassroots empowerment has EVER taken place in any of these so-called BBBEE transactions. One such particular transaction died a sudden death when a black person (with alleged high powered friends) blocked a transaction which would have constituted the blue print of real empowerment in South Africa’s mining activities. Needless to say the relevant mine will simply and ultimately end up in his and his cronies hands (all of which are billionaires since a long scam away!)

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