Johannesburg - A new report by a black economic empowerment (BEE)
consulting firm has found that South African mining companies are
dragging their feet in transferring a slice of the industry's wealth to
The study, compiled by KIO Advisory Services, which was founded by
former financial journalist Duma Gqubule, has established that the
gross value of black shareholding in the JSE-listed top 25 mining
companies was equivalent to 5.27%, or R98bn, of their market
The combined market capitalisation of the top 25 mining houses had reached R1.8 trillion at the end of March this year.
Within the top 25 mining companies, the study found that a lion's share
of the black wealth was concentrated in three JSE-listed companies,
coal miner Exxaro, Patrice Motsepe's diversified mining and minerals
company ARM, and platinum miner Impala.
The black ownership of these firms accounted for 69%, or R66.8bn, of total black mining ownership on the JSE.
The KIO study of black ownership in the JSE's mining sector was
commissioned by the South African Mining Development Association
(Samda) and appears to confirm the findings of a government-sponsored
draft review which revealed that the industry had woefully failed to
meet its BEE ownership targets. Samda is a mouthpiece for junior miners
and black-owned mining firms.
The report is also likely to embolden Mines Minister Susan Shabangu,
who has threatened tougher enforcement of BEE in the sector if progress
continued to be slow. In her budget vote speech in parliament this
week, Shabangu highlighted fronting and complex funding models for BEE
mining deals as some of the problems holding back black advancement.
"These models are typically designed to benefit principal partners,
financiers, legal advisers and other management firms to the
disadvantage of the intended beneficiaries, who remain not only
indebted but also in the absolute minority," she said.
"This has also created an environment for fronting, at which targeted
beneficiaries are not actively involved in mining project development,
but more focused on making quick money," said Shabangu, adding that
fronting was a disgrace and "a scourge against the realisation of
Six years ago, mining companies signed a BEE charter in which
they committed themselves to putting 15% of their equity stakes in
black hands by the end of last year and 26% by 2014.
That top JSE-listed miners have only transferred 5.27% of their wealth
is a clear indication that the 26% target will not be met in the next
four years. The five-year draft assessment by the department of mineral
resources (DMR), which included listed and unlisted firms, found that
blacks owned 9% of the mining sector.
Gqubule said he could confidently assert that very few of the mining
companies were close to meeting the 26% net value target set by the
"This is the most comprehensive review of black ownership in
the sector. It has reviewed more than 90% of BEE transactions by value
in the mining sector over the past decade," he said.
Lobby group the Black Management Forum (BMF) expressed unhappiness with the slow pace of transformation in the mining sector.
"The BMF and KIO Advisory Services will be approaching key industry
players in the mining sector, especially those on the JSE, policymakers
in government and business as well as labour to try and get to the
bottom of the difficulties in meeting the transformation targets set
for the mining sector," said BMF managing director Gaba Tabane. Additional reporting by Allan Seccombe.
- City Press