There would be a demand for a transfer of assets from white to black ownership until the South African economy ”looked less white”, the World Platinum Congress heard on Wednesday.
Referring to government targets for black economic empowerment (BEE), Reg Rumney of the Business Map Foundation asked: ”Is it unreasonable for 90% of the population to own 25% of the economy?”
”We have to get it (BEE) right,” Rumney said, adding that the alternative was ”politically explosive.”
BEE in the mining industry was of great importance to the African National Congress because of the history of exploitation of black workers in the industry. The present day influence of the trade union movement, and the active interest taken by Minerals and Energy Minister Phumzile Mlambo-Ngcuka also contributed.
The recently announced Mining Charter said 25% of the
mining industry should be black-owned within 10 years, and 13% within five years, and called for a R100-billion fund to achieve this. Forty percent of managers should be black within five years, and there were also targets for increased beneficiation of
minerals before they were exported, skills development
and affirmative procurement.
These targets would be ameliorated by ”a scorecard approach” which allowed progress in one area to be offset against less progress in another. BEE achieved in the past — such as increasing black employees’ ownership of shares — would also be taken into account.
Rumney said the sheer size of the mining industry made the targets ambitious — more so than the target of the earlier Liquid Fuels Charter.
The market capitalisation of mining companies on the JSE Securities Exchange at the end of 2001 was R690-billion; it was estimated that capital expenditure in the industry between 2000 and 2004 would total R78-billion; and minerals were 60% of the country’s exports. But Rumney emphasised that BEE was not negotiable.
Business Map’s usual advice was that a BEE deal should be ”active” rather than ”passive”, meaning not just black share-holding because shares could be sold, but also black management. But in order to reach the Mining Charter’s targets, ”passive” investments should also be considered.
There were pitfalls ahead. The small number of existing black mining companies meant there was a risk of ”empowering the same companies again and again”.
Financing BEE deals was difficult. Business Map estimated that ”black presence” on the JSE was down to about two percent, from a high of eight percent in 1998. This was largely because the empowerment deals had not been properly financed — through debt rather than from income.
Rumney said the ANC’s policy in the 1955 Freedom Charter had been to nationalise mines, banks and ”monopoly industries.” The 1994 Reconstruction and Development Programme was a shift away from
that socialist position, and the 1996 Growth, Employment and Redistribution policy was a further shift. But the ANC still wanted to achieve social goals through intervention, and BEE was such an
intervention. It ”filled the gap left by socialism”.
Rumney conceded that although BEE share ownership was supposed to be at market price, there was ”an element of expropriation” in that there was ”always some discounting of share prices to get the deals done.”
He concluded by saying ”with goodwill and a lot of intelligent handling of these (BEE) issues we can come clear.” – Sapa