/ 16 July 2008

Anglo too white for govt

Government has slammed Anglo American for failing to put black South Africans in top-tier management positions.

The Department of Minerals and Energy says that while it notes the progress made in some areas of empowerment, Anglo American has failed to ensure enough black control in its operating entities, such as Anglo Coal and AngloGold Ashanti.

The criticism came after Philip Baum, former acting CEO of Anglo South Africa, presented the company’s 2007 transformation report last week.

”Transformation means that black people manage operations at the highest level,” said Bheki Khumalo, spokesperson for the department.

He said that while the company has made significant progress in terms of ensuring that black people have a significant financial stake in the business, there are too few black people managing the company’s various arms. ”Who runs their operating entities?” he asked.

South Africa’s mining charter says companies must have a plan to place black people in at least 40% of management positions within five years of implementing that plan. The BEE good practice codes also require that 40% of companies’ senior managers be black South Africans.

Khumalo questioned the recent appointment of Kuseni Dlamini, who co-launched the report, to the position of head of Anglo American South Africa. He expressed concern that Dlamini’s role at the company will not be meaningful.

”These appointments turn into little more than government relations managers,” said Khumalo.

Dlamini is the first black businessman to take up the role after former chief executive Lazarus Zim left the post in 2006. Rumour had it that Zim left because his appointment proved to be little more than transformation window-dressing, giving him little real authority.

In his vote of thanks after the launch Dlamini alluded to concerns around the company’s retention of black executives. ”We know that leading black executives and businessmen at Anglo have left, and we must ask ourselves why,” he said.

Khumalo further said that the question of skill shortages is ”just an excuse” that companies use to justify their slow transformation rates.

”While we accept that black executives are highly mobile, if they are given meaningful roles and [competitive] retention and incentive packages, they will stay,” he said.

Steven Hawes, research and advisory project manager at empowerment rating agency Empowerdex, says this is a matter of both ”skills and access”.

”There is no doubt that the market for skilled black executives is competitive in that skills levels are not proportionate to the demographic, which makes transformation more difficult,” he said.

Hawes said that the diversity of operations that a company like Anglo American runs may make it more difficult for the company to acquire the diverse skills needed to fill senior management roles.

”But if you look at it specifically in terms of the Department of Trade and Industry criteria, they haven’t transformed as much as they need to,” he said.

Pranill Ramchander, spokesperson for Anglo American, said: ”While significant progress has been made at Anglo American South Africa with transformation, we acknowledge that work still needs to be done in some areas, particularly our women in management and historically disadvantaged South Africans in senior management.

”Our progress is shared in the spirit of transparency and openness and as such we invite feedback and comments from all our stakeholders to guide us on the way ahead. To this end, the Department of Minerals and Energy’s feedback is welcomed.”

Despite government’s concerns, Anglo American said that it has increased the proportion of black managers in the company to 42%, up from 39% in 2006.

It has also increased the amount it spends on procurement from BEE sources by 41% to form 37% of the company’s total procurement spend. Last year Anglo also completed seven large BEE deals worth more than R50billion.

Some key concerns remain, however, particularly in terms of sustainable development. Providing housing for mine workers is an ongoing problem.

The mining charter requires that mines work to improve housing and living conditions for their employees. However, the effect of migrant labour on municipalities where mines operate places great strain on municipal resources.

Furthermore, in a bid to unravel hostel accommodation schemes, mines began paying their workers a ”living-out allowance”. Many miners, however, simply spend or save the money, choosing to live in informal settlements.

”We are enormously concerned that the initiative through the housing scheme, which was really focused on helping staff afford houses, has seen people taking a short-term view,” Philip Baum told the Mail & Guardian.

He said, however, that service delivery on the part of many municipalities ”has been wanting” and that the country has lacked the ”infrastructural backbone” to enable the establishment of adequate accommodation for mine workers.

He said discussions are under way at board level but that resolving the housing problem is very much ”a work in progress”.

”The size of the problem differs in the different areas of our business,” he said. ”It is largely resolved in our coal mines — but Anglo Platinum is a bigger task that requires more engagement before we can commit to any outcomes.”