SA official criticises sale of BEE assets

The sale of South African black economic empowerment (BEE) mining assets to larger entities degrades the aims of the country’s mining charter, Futhi Zikalala, a senior official in the Department of Minerals and Energy Affairs, said on Monday.

Speaking at CoalTrans conference in Johannesburg, Zikalala, the deputy director general of mining policy and promotion, said: “Mining companies have been reluctant to embrace empowerment. Their response to the mining charter has led to nil or partial empowerment and to fronting.”

Fronting is the term for a BEE company, with assets that were transferred to black ownership to redress imbalances left from the apartheid era, as a shield for the real owners and decision makers.

Some BEE mining companies have complained that since the original mining charter in 1994, there has been no meaningful transfer of ownership in the industry.

These companies have lobbied the government for years to take a harder, more interventionist role and ensure transfer of ownership and control.

BEE sources said this week their recent discussions with the government have shown it is beginning to admit the empowerment drive did not work and another strategy had to be found.

The credit crunch has made BEEs yet more vulnerable to takeovers by large companies.

“Huge carrots are being offered to BEEs to sell their assets,” Zikalala said. “It’s quite disturbing for South Africa as it indicates a lot of assets granted to BEEs are not remaining in their hands.”

The sheer number of applications received this year by the Department of Minerals and Energy Affairs, to transfer mining licences from BEEs to new owners, is evidence of that trend, she said.

When a mine or reserve is sold, the DME must approve the transfer of the licences.
- Reuters

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