ONE new aspect of the mining charter, due to be published in Parliament next month, is a 1% levy on revenue over two years that will be channelled into community development.
Whilst the idea is considered sound by the South African mining sector, the mechanism is thought to be wrong-headed and could hasten the closure of struggling mines in the country.
The mining charter may also turn a blind eye to industry’s insistence of the ‘once-empowered, always-empowered’ principle which will pressure some firms into a new round of significant empowerment transactions.
It’s likely then that the Chamber of Mines will seek a court date for a declaratory order in the High Court on the issue of once-empowered, always-empowered – a path the government is not keen to tread.
Were government to reject certain past empowerment deals – those where the empowerment party has cashed in or where the transaction has failed – a number of mining companies would be exposed including, possibly, Sibanye Gold.
It may not be able to claim BEE deals conducted by Gold Fields which owned its mines prior to the 2012 de-merger that resulted in the creation of Sibanye.
A similar principle applies to Aquarius Platinum which Sibanye took over this year in a R4bn transaction although Sibanye has included new empowerment partners for Rustenburg Platinum Mines it bought from Anglo American Platinum.
There are also potential problems for Impala Platinum.
One of the elements of the draft mining charter is that of the 26% BEE target, no less than 5% has to sit either with employees or through formal employee share ownership programme (Esop).
Impala Platinum (Implats) has only a 4% in an ESOP through the Royal Bafokeng Holdings (RBH), but there are other problems. RBH recently sold down its holding in Implats to 6.3% from 13.2%.
Some empowerment deals involving the Anglo American Platinum were based on units of production rather than 26% equity in the company which may prove problematic.
Furthermore, the financial restructuring of Bokoni Platinum Mines, Anglo Platinum’s (Amplats) 49%-owned empowerment vehicle, raises questions about the number of empowerment credits it can claim. Amplats intends to sell Bokoni Mines although the DMR may look favourably on the deal if it’s too another black-owned company.
As for South32, it’s coal assets in South Africa could potentially fall foul of the draft mining charter because, as with Amplats, it is claiming empowerment points from before the mining charter was created in 2004.
Its assets are 8% owned by Pembani Group, and 2% owned by employees which falls below the 5% ESOP stipulated by the new draft mining charter.
