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Black share of mine ownership ‘remains small’
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Bheki Mpofu
Business Day
Friday, April 23, 2010
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THE mining industry is still largely white-owned, eight years after the signing of the mining charter aimed at transferring significant ownership to black people, according to a mining sector review released yesterday.
The study — commissioned by the South African Mining Development Association and conducted by KIO Advisory Services — shows that the gross value of black shareholdings was 5,27% of the total R1,8-trillion market capitalisation of the JSE’s top 25 mining firms at the end of last month. The mining charter had envisaged companies to have achieved 15% black ownership by 2007 and 26% by 2014.
The industry agreed to review the implementation of the charter within five years.
The report’s findings are in line with a draft government review of the charter completed in October, which showed miners had fallen short of most transformation targets in the charter.
The government review, which has been kept under wraps for more than six months, raised concern that blacks still owned only about 9% of the R2-trillion net assets of the mining industry.
The gloomy picture on black ownership painted by both reports is likely to further fuel controversial calls for nationalisation of the country’s mineral resources, which account for the bulk of SA’s exports.
The Department of Mineral Resources’ draft review also reflected the government’s impatience with the pace of change since the charter came into force. The KIO report found that the black economic empowerment market cap within the top 25 companies was R98bn. This figure did not take into account the debts incurred by black shareholders.
The gross value of black shareholdings in Exxaro, ARM and Impala Platinum was R66,8bn, equivalent to 69% of the empowerment market cap for the top 25 companies.
This echoes findings in the department’s review, which noted that while companies had made empowerment deals, ownership was still concentrated in the hands of a few black beneficiaries.
“This is the most comprehensive review of black ownership in the sector. It has reviewed more than 90% of empowerment transactions by value in the mining sector over the past decade,” said Duma Gqubule of KIO Advisory Services.
The report presents an analysis of the performance against the charter’s ownership targets of five subsectors within the mining industry — platinum group metals, coal, gold, iron ore and manganese — which accounted for more than 80% of SA’s total commodity sales in 2008.
This analysis reveals a mixed performance for the subsectors.
Gold mines were the worst performers, followed by platinum group metals. The coal sector led the way for the mining industry largely because Eskom, the largest buyer, has stringent empowerment policies.
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