BLACK ECONOMIC EMPOWERMENT
Assore has achieved ownership by historically disadvantaged
South Africans (HDSAs) of 26% of its issued shares during
2010. Assore is supportive of the broad-based economic
imperatives contained in the Minerals and Petroleum
Resources Development Act (the MPRD Act) and the Broadbased
Socio-economic Empowerment Charter for the South
African Mining Industry issued thereunder (the Mining
Charter), and has embarked on initiatives aimed at meeting
these requirements at its mining operations, as set out below.
The MPRD Act has changed the previous common
law and statutory position in South Africa in terms
of which mineral rights could be held privately.
Instead, pursuant to the MPRD Act and with
effect from 1 May 2004, the State has assumed
sovereignty and custodianship of all mineral rights
in South Africa and will grant prospecting rights
and mining rights to applicants based on the merits
of their applications (which are designated as
new-order rights). A transitional period is provided
during which holders of existing mineral and
exploration rights (designated as old-order rights),
upon meeting certain requirements, may convert
such existing in-use old-order rights into new-order
rights, or in the case of unused rights, may apply for
new-order rights.
The Mining Charter is intended to facilitate the
entry of historically disadvantaged South Africans
(HDSAs) into the mining industry. The scorecard
which the State has issued pursuant to the
Mining Charter requires, inter alia, that mining
companies achieve 15% HDSA ownership of
mining assets within five years (ie 1 May 2009)
and 26% within 10 years (ie 1 May 2014), which
has been maintained by the Department of
Mineral Resources (DMR), following a review of
the Mining Charter during the year, as the target
required to be achieved by mining companies. The
Mining Charter also requires, inter alia, that mining
companies provide plans and achieve employment
equity at management level and procure goods
and services from black empowered organisations
on a preferential basis in accordance with the
predetermined criteria set out in such plans.
In view of meeting the Charter’s requirements,
Assore, through its various group companies, has:
| • | concluded empowerment transactions with Mampa Investment Holdings (being the commercial arm of the Mankwe Development Foundation) (Mampa) in April 2004 and Shanduka Resources (Proprietary) Limited (Shanduka Resources) and the Bokamoso Trust (the Community Trust) in February 2006 (refer below); |
| • | succeeded in obtaining new-order mining rights for the chrome operations in Rustenburg Minerals Development Company (Proprietary) Limited (RMDC or Rustenburg Minerals) on the farms Zandspruit and Groenfontein; |
| • | applied for and obtained new-order mining rights on the iron ore deposits mined at Khumani; and submitted applications for the conversion of all remaining old-order rights to new-order rights, in particular manganese ore (Nchwaning and Gloria mines), chrome ore (Dwarsrivier) and Wonderstone prior to 1 May 2009. The DMR notified Assmang Limited (Assmang) in August 2010 that the new-order rights for Nchwaning and Gloria manganese mines have been approved subject to the submission of survey diagrams, which is currently under way; |
| • | ensured that the extent of compliance with the Charter is reported on and monitored on a regular basis at the Excom level; |
| • | where new-order mining rights are issued, compliance with the terms and conditions has been subjected to audit by the DMR, and no non-compliance issues of any significance have been reported; |
| • | implemented a preferential procurement
policy at all its operations (refer “Preferential
procurement” on page 49); and |
| • | developed social and labour plans for each of its operations, as well as local economic development (LED) projects which support the integrated development plan of the relevant local authority. The plans, which have received the approval of the relevant departments, include the construction of educational facilities, food security projects and presentation of programmes on adult education, health and safety and environmental awareness. |
| Following the introduction of the MRPD Act, Assore has entered into the following empowerment-related transactions: | |||||
| • | In April 2004, an empowerment transaction was finalised with Mampa in terms of which Mampa acquired a 44% interest in RMDC. RMDC mines chromite in the Rustenburg area and was previously a wholly owned subsidiary of the Assore group. Mampa is represented on both the Management Committee and the board of RMDC and in October 2005, RMDC was successful in its application to convert all of its mining rights to new-order rights. | ||||
| • | In February 2006, the Assore group entered
into empowerment transactions effecting the
acquisition of 15,02% of the issued ordinary
share capital at that date of Assore by two black
economic empowerment (BEE) entities, namely:
|
||||
| • | In March 2010, Assore entered into its second
empowerment transaction for the group (the
transaction), in which:
|
||||
For full details of this transaction, shareholders are referred to the circular in this regard issued to shareholders on 2 December 2009.
The control by HDSAs of Assore’s shares upon completion of the second empowerment transaction is therefore as follows:
| Shareholder | % of shareholding |
| Bokamoso Trust | 14,28 |
| Shanduka Resources | 11,79 |
26,07 |
THE BOKAMOSO TRUST
The Bokamoso Trust (the Trust) was established for the benefit of HDSAs and broad-based HDSA community groupings residing in the areas in which the Assore group’s mines and beneficiation plants are located. Assore has initiated a process through which it will identify HDSA trustees in accordance with the trust deed.
Assore has established an interim Board of Trustees, and following the second empowerment transaction, is in the process of searching for and appointing independent black trustees. The terms of this transaction also entitle the Trust to be entitled to an annual flow-through payment of at least R2 million per annum, to the beneficiaries irrespective of the commitments to the Assore group with regard to the funding of the transaction.
SHANDUKA RESOURCES
Shanduka Resources is a wholly owned subsidiary of Shanduka Group, a black-owned and managed investment holding company founded by Cyril Ramaphosa, James Motlatsi and several other black professionals. Shanduka Group encompasses its own element of broad-based BEE (BBBEE) through a 10% equity shareholding by a consortium of women, as well as a further 5% shareholding by community development trusts. These trusts are part of the Shanduka Foundation which was launched in 2004 as the vehicle through which Shanduka channels its social and community investment initiatives. Shanduka has committed to spending in excess of R100 million in upliftment programmes over the next 10 years.
| The Shanduka Foundation is committed to supporting initiatives aimed at: | |
| • | developing small businesses and new entrepreneurs; |
| • | providing scholarships for deserving, previously disadvantaged students at accredited tertiary institutions enabling them to continue their studies in business-related courses; and |
| • | assisting underprivileged schools to acquire basic facilities through the Adopt-a-School programme. |
Shanduka Resources has a long-term strategy to develop a diversified resources house with operational capabilities and, in addition to Assore, has investments in the coal, platinum, gold, diamond, paper and mining services industries.
Shanduka Resources provides leadership for Assore’s BEE partners and strategic support to Assore in achieving its BEE objectives.
Assore concluded relationship agreements with each of the Trust and Shanduka Resources in order to regulate the respective relationships between the parties to ensure, in so far as is possible, the continued compliance by each of Shanduka Resources and the Trust (as the Assore group’s BEE partners) with the direct ownership requirements of the Mining Charter.
PREFERENTIAL PROCUREMENT
Assore is committed to bringing previously disadvantaged South Africans into the mainstream of the economy by identifying, developing and availing business opportunities to BBBEE suppliers at all its operations. A summary of the percentage BBBEE procurement measured against total discretionary procurement is presented in the table below.
ARM management has continued to focus on supplier selection and evaluation, resulting in an increased proportion of BBBEE. The two underground shafts at RMDC are nearing completion, resulting in the reported decreased expenditure. The increased proportion of BBBEE expenditure for African Mining and Trust Company Limited (African Mining and Trust), Rustenburg Minerals and Wonderstone Limited (Wonderstone) is due to our ongoing commitment to the implementation of the requirements of the Mining Charter and the DTI Codes of Good Practice. Processing of old tailings recently commenced at Zeerust and it is envisaged that the discretionary procurement will increase significantly in the current financial year.
2010 |
2009 |
||||
Total |
Total |
||||
discretionary |
discretionary |
||||
procurement |
Aggregate |
procurement |
Aggregate |
% |
|
R’million |
% BBBEE |
R’million |
% BBBEE |
increase |
|
| Assmang | 5 448,4 |
46,2 |
5 315,7 |
40,3 |
5,9 |
| Rustenburg Minerals | 113,3 |
69,4 |
183,2 |
26,8 |
4,6 |
| Zeerust | 1,6 |
16,4 |
n/a |
||
| Wonderstone | 9,8 |
52,9 |
22,7 |
38,4 |
14,5 |
| African Mining and Trust | 55,6 |
42,9 |
29,3 |
29,2 |
13,7 |
| Total discretionary procurement is defined as total procurement less procurement through public sector vendors, eg rates and | |||||
| taxes and utility service providers | |||||
