BEE SEMINAR. Black Economic Empowerment MS FUTHI ZIKALALA MVELASE SENIOR OFFICIAL DEPARTMENT OF MINERALS AND ENERGY 20 NOVEMBER 2007

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2 BEE SEMINAR Black Economic Empowerment MS FUTHI ZIKALALA MVELASE SENIOR OFFICIAL DEPARTMENT OF MINERALS AND ENERGY 20 NOVEMBER 2007

3 HISTORICAL BACKGROUND Prohibition of Black & women ownership of mines & restricted work Resultant exclusion of majority of South Africans S A s vast mineral wealth & significant contributor to GDP & individual wealth of minority group Stunted & lack of development for majority Blacks & women Growing dissatisfaction with status quo

4 STATE INTERVENTION Urgent need for State intervention to redress past imbalances Transformation of the SA mining industry: an imperative for South Africa Constitution of the RSA: section 9 right to equality White Paper: A Minerals and Mining Policy for South Africa, 1998 Mineral and Petroleum Resources Development Act, 2002 The Mining Charter, 2002

5 STATE INTERVENTION 1994: President Nelson Mandela: we must, constrained by and yet regardless of the accumulated effect of our historical burdens, seize the time to define for ourselves what we want to make of our shared destiny. 2006: President Thabo Mbeki: Millions deed indeed seize the time and, in action, defined ours as a shared destiny of peace, democracy, non-racism, non-sexism, shared prosperity and a better life for all

6 THE CONSTITUTION Section 9 (1): Everyone has the right to equality Section 9 (2): Equality includes the full and equal enjoyment of all rights and freedoms. Legislative and other measures designed to protect or advance persons, or categories of persons, disadvantaged by unfair discrimination may be taken

7 CONSTITUTIONAL VIEW Notion of BEE a policy imperative to redress imbalances of the past and achieve equality It is a significant part of the shared destiny to achieve non - racialism, non - sexism and a better life for all Achieving a transformed mining industry is a legal and Constitutional imperative Judge Albie Sachs, Constitutional Court Judge: redress is not an option, it is an imperative. Without major transformation, we cannot heal the divisions of the past and establish a society based on democratic values

8 POLICY STATEMENTS The Mining and Minerals Policy, 1998 Chapter 2: Participation in Ownership and Management Black participation in ownership & management to have special political significance for SA s development as a market based democracy Promotion of wider spread of ownership & facilitation of further changes Facilitation of steps to deracialise business ownership & promotion of ESOPs

9 LEGISLATIVE STEPS The MPRDA, 2002 Section 2: Minerals belong to the nation HDSAs, including women, to share in mineral development for a better life Promotion of economic growth and sustainable development Ownership as part of licencing provisions & therefore for monitoring throughout LOM

10 THE MINING CHARTER Section 100 of MPRDA Ownership Equity shares, guidelines of 15% & 26% set Owning mines as HDSAs Payment for such ownership Skills transfer ESOPS Employees sharing ownership Industry undertaking of R100billion how far?

11 NATURE OF BEE Expression of Substantive Equality calling for serious consideration of race & gender Tangible foundation for transformation & redress of past imbalances in mining Attempts to ensure entry of those previously unable to participate Partnerships for mutual growth, wealth creation & wealth sharing Growth & sharing of skills

12 WHAT BEE IS NOT A number crunching game 15%, 26%, 2009, 2014 A mere licencing matter therefore once empowered, always empowered notion Government liaison mechanism Enrichment scheme A free ride payment is part of Selling of rights scheme hence sec 11

13 HOW FAR WE HAVE COME 3 years into conversion period: BEE compliance on the rise, often large companies announcing BEE deals Inclusion of BEE at prospecting on track, skills transfer critical at that level A number of ESOPs sharing in large BEE deals Growth in prospecting & mining investments, with BEE entities included Increasing no of BEE entities holding own rights Growing no of women entities getting involved

14 CHALLENGES TO BEE NOTION It is early days yet to do proper assessment In spite of that: Growth pace not fast enough -for BEE numbers & BEEs themselves, esp women BEE financing needs more attention Sources of funding Structuring of deals Some unwillingness to adhere to BEE Policy & Law hence challenges

15 OF BEE & TRANSFORMATION The system of state-sponsored racial domination not only imposed injustice & indignity on those oppressed by it, it tainted whole society & dishonoured those who benefited from it Judge Albie Sachs South Africans as a whole have to continuously embrace the need for transformation Mining industry & stakeholders to continue working towards shared destiny Lest we forget: there is no going back

16 CONCLUSION South Africa is open for business Transformation can only enhance growth Women are ready to do business THANK YOU