THE Department of Minerals and Energy this week openly questioned the empowerment credentials of a leading black mining company after the Mail & Guardian exposed the extent of diamond giant De Beers’s hold over it.
The M&G last month reported on a highly restrictive clause in a deal between the empowerment company, New Diamond Corporation (NDC), and De Beers.
The clause, part of a confidential agreement, gives De Beers extraordinary powers over any future activities by the NDC in the diamond industry.
Comments by the department’s Director General, Sandile Nogxina, this week were the first open confirmation that the government is not taking the matter lightly. Nogxina told the M&G: ”With this clause in place, there is no way we can regard this as genuine black economic empowerment.”
The NDC’s executive chairperson, Tiego Moseneke, said: ”Should the government … form a view about these or similar matters, we would arrange our affairs appropriately.”
Nogxina also confirmed that shortly after the M&G article appeared, his department expressed concerns about the clause to the NDC. He said he also planned to meet De Beers.
Nogxina said his department was concerned that De Beers had paraded the NDC as its black economic empowerment partner, while the diamond giant had in place ”shackles placed on the NDC”.
Asked whether the controversial clause in the NDC/De Beers deal might affect NDC’s future applications for mining permits, Nogxina said: ”Yes. We will definitely scrutinise all black empowerment applications, to ensure that they are genuine.”
His department did not wish to interfere in business transactions between private mining concerns. But it would not tolerate transactions that undermined its policies.
The NDC/De Beers agreement was signed over a lucrative diamond mining venture in Limpopo in 1999, which involves the high-grade Marsfontein Mine near Potgietersrus.
The controversial clause in the agreement says: ”NDC agrees in favour of De Beers that, except in accordance with this agreement, it will not be associated in any manner, whether directly or indirectly or through associated holding or subsidiary companies, with any venture, negotiation, tender or proposal incidental to the diamond industry unless De Beers has been offered, in writing and with reasonable notice, an opportunity to participate on equal terms and has declined to do so in writing, within a reasonable period after receipt of the said notice.”
Nogxina confirmed he met Mos-eneke at the department’s Pretoria headquarters to register his concerns relating to this clause. When the M&G first exposed it, both the NDC and De Beers responded, saying there ”was nothing unusual with their deal”.
However, lawyers told the M&G at the time that the clause in the agreement raised the possibility of collusive behaviour that could violate South African competition law.
One said it was possible the contract was not enforceable. The lawyers added that the clause was unusual, as it dealt with matters that went far beyond the Limpopo joint venture.
The NDC and De Beers dismissed this assertion. However, Nogxina this week maintained that the clause in question undermined his department’s policy on black empowerment.
Other senior government officials, who did not want to be identified, said the clause allowed De Beers, a dominant player in the diamond industry, to control the growth of NDC.
The NDC has been awarded mining permits on the grounds that it was a ”credible” black empowerment company, the official said.
The government gives preference to black mining companies when handing out permits. This policy is being strengthened by the new Mineral Rights Bill, which makes black empowerment a compulsory criterion when granting mining and prospecting permits to private companies.
De Beers insisted it had empowered the NDC, selling its mothballed Kamfersdam mine near Kimberley, Northern Cape, to the firm for R38-million.