Minister hits back as mines seethe over BEE audit

Mineral Resources Minister Ngoako Ramatlhodi has warned that the Chamber of Mines may be "escalating the situation", after tensions between mining giants and government over empowerment bubbled over.

On Thursday, Ramatlhodi surprised mining companies by releasing the findings of the government's BEE audit, measuring the industry's progress in terms of black empowerment over the past decade.

This angered the Chamber of Mines, which represents most of the big mining companies. It retaliated on Friday and called a press conference to release its own - vastly different - figures on the industry's empowerment progress.

Late on Friday, Ramatlhodi defended his decision to release the government's BEE scores.

"Maybe [the chamber is] escalating the situation, but from our side, the door is not shut. We are willing to get a neutral party to see which side's interpretation of the Mining Charter is right," he told Business Times.

Ramatlhodi said the different figures were not necessarily a symptom of a breakdown of the relationship between him and the companies he regulated.

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"I think I have been fair and I have extended the deadlines as much as I could. I had to release these figures at the end of March already," he said.

But analysts raised the alarm.

"This is terrifying. It is the worst disagreement I have seen to date and could have dire consequences for the country's mining industry," said mining expert Peter Major.

The chamber and the government worked with the same data from companies, but their numbers are completely different.

The chamber said it was "firmly of the view that 100% of chamber members have achieved the 26% ownership target" laid down by the 2004 Mining Charter - contradicting Ramatlhodi's contention on Thursday that only 79% of mining companies had met this target.

The chamber also claimed that black ownership of mining companies stands at about 38%, whereas Ramatlhodi's Department of Mineral Resources put this figure at 32%.

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Further, the two are completely misaligned on whether companies have implemented a health and safety plan. Here, the government said companies had achieved only 1.6% compliance, while the c hamber claimed an 86.2% compliance rate.

As tempers mounted on Friday, the chamber accused the government of "shifting the goalposts midstream" and "incorrectly [accusing] the industry of noncompliance" - something it said was "damaging to trust and investment in the mining sector".

Black ownership is at the heart of the dispute. Empowerment transactions done over the past 12 years amount to between R159-billion and R282-billion, and the mining industry has helped launch 46 black-owned companies and many successful entrepreneurs, including Patrice Motsepe and Tokyo Sexwale.

But this week, the government said the industry had not done enough on broad-based empowerment.

The department said only 20% of mining companies had BEE ownership and community and employee share schemes in place. The chamber, however, said all three of these empowerment components were in place at 41% of companies.

The chamber and the government were in court last month to clarify the BEE ownership issue and are awaiting a ruling.

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Part of this dispute centres on the principle of "once empowered, always empowered". Companies insistedthat once they had sold 26% to black owners, they should be considered to have met the charter requirement even if those investors sold. The government said companies must maintain their 26% black ownership.

Asked why the minister released the audit figures as he did, chamber president Mike Teke answered: "I would love to know why he did it."

Uncharacteristically, the chamber has taken a strong stance on the empowerment matter. Chamber CEO Roger Baxter said that according to an independent BEE audit done by Rand Merchant Bank and SizweNtsalubaGobodo, mining companies actually exceeded the Mining Charter's requirements.

"But instead of getting any recognition for what has been done, we just receive criticism," Baxter said.

Major said the billions spent by the mining industry to try to transform was met by "a slap in the face and a kick in the balls".