Mines take the BEE lead

Johannesburg - South African mining companies are by far the most active when it comes to black economic empowerment (BEE) deal-making.

Some 69 transactions, with a value of more than R82.7bn, have been completed in the mining industry since the beginning of 2007.

A new research report from the consultation group Who Owns Whom shows that between November 2008 and August 2009 20 transactions worth R24.5bn were signed in the industry.

According to Who Owns Whom managing director Andrew McGregor, the mining industry was the first to announce an empowerment charter in 2004, with black ownership targets of 15% by 2009 and 26% by 2014.

Strict new legislation also makes it impossible for mining companies to obtain new mining licences or rights without the necessary empowerment status, all of which contributes to mining companies focusing increasingly on BEE.

A total of 261 empowerment transactions, with a declared value of R200.4bn, were completed between January 2007 and August 2009 in South Africa. The value of the transaction was only declared in 69% of the deals, Who Owns Whom says.

Other industries where significant transactions were signed include the petroleum industry (7 transactions for R24.2bn), construction (22 transactions, R13.5bn) and transport, storage and communication (25 transactions, R18.1bn).

The economic crisis caused many empowerment transactions to flounder between November 2008 and August 2009.

The Group Five/Ilima transaction was one of the most prominent, McGregor says.

After four years, Ilima could not obtain the necessary financing to meet its repayment commitments.

With the recovery of the markets it's unlikely more major failures will be seen, says McGregor.

- Sake24.com

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