The once maligned, much awaited and widely accepted mining charter ranks, to my mind, as one of the finest achievements in the economic transformation process of the democratic order.
Along with the budgetary reform process and, the trade unions’ objections notwithstanding, the adoption of the growth, employment and redistribution strategy, the charter represents a carefully struck balance in response to a range of competing needs.
Yet scepticism, perhaps understandably, remains. North American fund managers polled by Miningweb are among the most vocal, unconvinced voices. Miningweb columnist Tim Wood also has interesting misgivings of his own. He recently wrote, “South African mines have paid dividends and rewarded shareholders for more than a century … ” through ills ranging from two world wars to American sanctions and erratic commodity prices.
“Now,” Wood continues, “they must do it once more under the second historic menace of nationalisation driven by ethnic politics.” Another way of looking at this is to say our mines have paid dividends and rewarded shareholders for more than a century through massive exploitation, exclusion of the majority and a callous indifference to the plight of communities from which they draw their labour or those that host them. Now they have to do it in a manner that is humane and equitable and include the majority on merit.
Ironically, the feature that gives the charter credibility also presents a huge potential for disagreement: the requirement that transactions are undertaken in a transparent manner at market value on a willing-seller, willing-buyer basis. How this can present a conflict is rooted in perception.
Empowerment players have, by actions rather than by words, abandoned for the moment the idea of using the stock exchange as a finance-raising option. This means a lot of deals will happen outside the bourse. Now on the stock exchange, transaction valuation takes place in full view of the market. If shareholders believe they were overcharged, you will simply see the price drop. In unlisted entities, do not be surprised if a prospective empowerment player complains that assets are deliberately overpriced to prevent a sale occurring. And that is just part of the problem. The other is raising the finance for the envisaged transfer of R195-billion worth of mining assets into black hands in 10 years.
An absurd objection has been to the quota of 26% ownership in 10 years.
Truth is, without targets, we have nothing to work towards. In 10 years we would pose and say: we have transferred this much to black hands and it happens to be, say, 26% of mining assets, is this enough? That would give rise to disenchantment and would fuel the feeling that political power has not given black majority economic muscle.
That, as AngloGold’s Bobby Godsell continually tells whoever will listen, would give rise to a Zimbabwe-type backlash.
Archive: Previous columns by Thebe Mabanga