The new face of BEE

BLACK economic empowerment (BEE) will never be the same – and that's not because of the past few months' scandals.

For some time it has been realised that transformation through BEE, with huge deals in top companies, is failing.
 
The scandals, like Imperial Crown Trading’s acquisition of mineral rights in the world famous Sishen mine, are simply the cherry on top.

Jenny Cargill, a former ANC exile and founder of BEE consultancy group BusinessMap, published a book earlier this year in which she proved unequivocally that this type of BEE was a bitterly unproductive application of capital resources.

This was probably the theoretical basis of pronouncements by another BEE pioneer, Paul Nkuna of the Mineworkers Investment Company, that the time for large, glittering BEE transactions had passed.

Nkuna reckoned that “broader” transactions such as employee share schemes, public offers and community transactions were the future of BEE.

At the same time he expected that the focus on enterprise development and entrepreneurship would decline.

The debate on the nationalisation of mines might be fruitless, but one should not overlook the fact that this debate and the support for voluble personalities like Julius Malema and Jimmy Manyi are symptoms of something very serious – that the broad population is dissatisfied with the progress of economic transformation.

Niall Carroll, chief executive of Royal Bafokeng Holdings (RBH), probably put his finger on the pulse last week when he denounced Anglo Platinum because it had kyboshed Impala Platinum’s bid for the Rasimone mine.

Carroll’s speech drew attention as he disclosed that Implats had offered slightly less than R20bn for the Bafokeng-Rasimone mine.

This was an enormous amount if one took into consideration that the mine was being valued at R9bn to R11bn for the coming listing of Royal Bafokeng Platinum (RBP), which will probably take place next month.

RBP is, in its own right, an exciting company, given the Bafokeng’s tribal history of the platinum industry.

In addition, the news about Implats' offer will ensure that the listing will be by far the most exciting debut on the JSE since global markets collapsed two years ago.

The excitement accompanying the listing and Carroll’s sharp criticism eclipsed his other remarks on black economic empowerment in the mining industry.

Carroll said Anglo American, and particularly its biggest platinum subsidiary Anglo Platinum, were following a model of black economic empowerment that differed from that followed by Implats, which had involved the Bafokeng tribe as a BEE shareholder.

Angloplat was selling certain assets or portions of assets to its BEE partners, but retained full control over the centre of economic power.

Implats had not chosen the Bafokeng as its partner. The mining group had actually been forced into a settlement with the Bafokeng after years of litigation and unhappiness about previously expropriated tribal land.

The settlement, reached in 1999, entitled the Bafokeng to 15% of Implats’ pre-tax profits, but in 2007 this had been exchanged for a 13.2% stake in the holding company.

This made the Bafokeng Implats’ largest shareholder.

The stake is not large enough to control Implats, but enough to have a significant impact on all company decisions.

Since 2003 RBH financial director Thabo Mokgatlha has served on the Implats board, representing the tribe.

Ten years after the settlement the relationship between the tribe and Implats is an example of how mutual respect and cooperation benefits all those involved.

Angloplat has endless problems with communities within which it is mining.

A tale of two tribes

The full story of the struggles between Angloplat and the Mapela tribe – on whose land Angloplat developed its richest mine Mogalakwena (previously PPRust) at Makhaho – has never been told, but it is an ugly tale of one of the country's oldest tribes which was simply driven from its land.

Today the Mapela are beggars, ostensibly resettled by Angloplat in nice homes, but in areas with no hope of economic activity.

The tribe had desperately wanted a stake in Mogalakwena/PPRust, but Angloplat flatly refused.

When blasting started in 2007 some 500m from the tribe's schools, churches and houses, its members had no option but to give way. Angloplat literally blasted them off the land.

The Bafokeng, in contrast, is the richest tribe in Africa, employing some R800m in annual dividends to improve education, tangible community infrastructure and economic development.

The difference between the relations of the Mapela and the Bafokeng with their mining companies is that 150 years ago the Bafokeng started buying back with hard-earned money their expropriated land on which the old Transvaal Republic had meted out farms.

This was done, ironically enough, owing to advice from President Paul Kruger, who was friendly with the Bafokeng monarch, Kgosi Mokgatle.

After the advent of democracy Implats was obliged to compensate the tribe.

It eventually became clear that a stake with real participation in Implats’ operations was the best expedient.

Angloplat continues to have problems with communities at Modikwa, the mine that it operates in partnership with Patrice Motsepe’s African Rainbow Minerals (ARM).

There is also bad blood between various junior platinum groups and the communities in which they are doing exploration work and where they are attempting to establish mines.

In his speech attacking Angloplat and Anglo American, Carroll denounced their relations with black partners and mining communities – an area in which the group is almost without exception experiencing problems.

This denouncement has merit, which Anglo would do well to note. The fact that these partners are not directly represented at the highest level in Anglo is probably the essence of the problem.

How can a board sitting in London, with several members from the British aristocracy, be sensitive to the needs and aspirations of a tribe of subsistence farmers which has for centuries lived on ground containing some of the world's most valuable minerals in the Limpopo bushveld?

The Bafokeng represent a model for new types of BEE. The rest of the mining industry should have the magnanimity to recognise this and follow the model.

But magnanimity is unfortunately not mining bosses’ strong point.

 - Sake24