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Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

Codes of Good Practice on Black Economic Empowerment

Mining Sector Charter

Scorecard for the Broad Based Socio-Economic Empowerment Charter for the South African Mining Industry

4.7 Ownership and Joint Ventures

 

Government and industry recognise that one of the means of effecting the entry of HDSA’s into the mining industry and of allowing HDSA’s to benefit from the exploitation of mining and mineral resources is by encouraging greater ownership of mining industry assets by HDSA’s. Ownership and participation by HDSA’s can be divided into active or passive involvement as follows:

 

Active involvement:

 

• HDSA controlled companies (50 per cent plus 1 vote), which includes management control.

 

• Strategic joint ventures or partnerships (25 per cent plus 1 vote). These would include a Management Agreement that provides for joint management and control and which would also provide for dispute resolution.

 

• Collective investment, through ESOPS and mining dedicated unit trusts. The majority ownership of these would need to be HDSA based. Such empowerment vehicles would allow the HDSA participants to vote collectively.

 

Passive involvement:

 

• Greater than 0 percent and up to 100 percent ownership with no involvement in management, particularly broad based ownership like ESOPs.

 

In order to measure progress on the broad transformation from the following indicators are important:

 

• The currency of measure of transformation and ownership could, inter alia, be market share as measured by attributable units of South African production controlled by HDSAS.

 

• That there would be capacity for offsets which would entail credits/offsets to allow for flexibility.

 

• The continuing consequences of all previous deals would be included in calculating such credits/offsets in terms of market share as measured by attributable units of production.

 

• Government will consider special incentives to encourage HDSA companies to hold on to newly acquired equity for a reasonable period.

 

In order to increase participation and ownership by HDSA's in the mining industry, mining companies agree:

 

• To achieve 26% HDSA ownership of the mining industry assets in 10 years by each mining company; and

 

• That where a company has achieved HDSA participation in excess of any set target in a particular operation then such excess maybe utilised to offset any shortfall in its other operations.

 

All stakeholders accept that transactions will take place in a transparent manner and for fair market value. Stakeholders agree to meet after 5-years to review the progress and to determine what further steps, if any, need to be made to achieve the 26% target.