Black economic empowerment status report

Assore strongly endorses the broad-based black economic imperatives contained in the Minerals and Petroleum Resources Development Act (the MPRD Act) and the Broad-based Socio-economic Empowerment Charter for the South African Mining Industry issued thereunder (the Mining Charter), and since their inception has embarked on a number of initiatives aimed at meeting these requirements at its mining operations, as set out below.

In terms of the MPRD Act, which came into effect on 1 May 2004, the state has assumed sovereignty and custodianship of all mineral rights in South Africa and grants prospecting rights and mining rights to applicants based on the merits of their applications (which are designated as new-order rights). A transitional period from this date, to 1 May 2014, was provided for during which holders of existing mineral and exploration rights (designated as old-order rights), upon meeting certain requirements, could convert such existing in-use old-order rights into new-order rights or, in the case of unused rights, could 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 required, inter alia, that mining companies should achieve 26% HDSA ownership of mining assets by 1 May 2014. The Mining Charter also requires, inter alia, that mining companies provide plans for achieving employment equity at management level and procuring goods and services from black empowered organisations on a preferential basis in accordance with the predetermined criteria set out in such plans. Since 2004, with a view to meeting the Charter’s requirements, Assore, through its various group companies, has achieved the following empowerment milestones:

  • Concluded an empowerment transaction with Mampa Investment Holdings (being the commercial arm of the Mankwe Development Foundation) (Mampa) in April 2004, pursuant to which new-order mining rights for the chrome operations in Rustenburg Minerals Development Company Proprietary Limited (Rustenburg Minerals) on the farms Groenfontein, Zandspruit and Vogelstruisnek were obtained.
  • Having met the requirements of the MPRD Act regarding conversion of old-order mining rights, Assmang has secured new-order mining rights for all its operations. The rights for the manganese deposits at Black Rock (comprising Assmang’s Nchwaning and Gloria mines) and the chrome ore rights (Dwarsrivier) have been executed and lodged for legal registration.
  • Successful conversion and execution of old-order mining rights to new-order mining rights for pyrophyllite (Wonderstone).
  • Implemented a preferential procurement policy at all its operations (refer “Preferential procurement”).
  • Developed social and labour plans (SLPs) 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 schools and crèches, food security projects, and presentation of programmes on adult education, health and safety, and environmental awareness (refer “Sustainability report“, located on the group’s website under “Annual reports” in the “Investor centre”).

The extent of compliance with the Charter is reported on and monitored on a regular basis, both at Exco level and by the board, through the Social and Ethics Committee and specifically with regard to new-order mining rights, which are subject to audit by the DMR, and to date the DMR has not reported any significant issues of non-compliance.

Following the introduction of the MPRD Act, Assore has, specifically at a holding company level, entered into empowerment- related transactions, which have resulted in control by HDSAs comprising 26,07% of Assore’s ordinary shares as follows:

Shareholder shareholding
Boleng Trust 14,28
Fricker Road Trust 11,79
Total 26,07


The Boleng and Fricker Road trusts

The Boleng and Fricker Road trusts (the trusts) have been 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. Since the objectives of the trusts are very similar and they have the same trustees, the Boleng Trust has been made a beneficiary of the Fricker Road Trust and the composition of the boards of trustees of both these trusts is identical.

In terms of the agreements between Assore and the trusts, the Fricker Road Trust qualified for dividends (after dividends tax) of R16,4 million (2014: R13,3 million) during the year, while the Boleng Trust is entitled to a flow-through payment of at least R2 million per annum, irrespective of the commitments to the Assore group with regard to the funding of the transaction provided by Assore. The boards of trustees of the trusts are as follows:

Dr TG Sibiya (Chairman)*
CJ Cory#
RN Lekgatle#
Ms K Makhaya*
M Mtshali*
Ms TPJ Ngxulelo*

* Independent trustee.
#Founder trustee

Assore has concluded agreements with the trusts in order to regulate the respective relationships between the parties to ensure the continued compliance by the trusts (as the Assore group’s BEE partners) with the direct ownership requirements of the Mining Charter and the appropriate restrictions on the transfer of Assore shares by the trusts.

During the 2015 financial year, and pursuant to the trust deeds, the trustees have approved expenditure on its major projects amounting to R9,6 million (2014: R6,9 million) and have committed themselves to spending a further R15,1 million, details of which are as follows:

Operation Description Spend
to date Commitment Total
R’000 R’000 R’000
Zeerust Chrome Mines Mmasebodule Primary School 13 524 267 13 791
Rustenburg Minerals Imfundo Likusasalethu, primary educational intervention 1 651 1 310 2 903
Rustenburg Minerals Makgope Primary School Media Centre 1 284 16 1 300
Wonderstone Tsholonang Children’s Disability Centre 4 461 4 461
Wonderstone Student boarding facility at Ottosdal 2 500 2 500
Wonderstone Support of variousstudent requirements, including bursaries and transport 5 305 5 305
Wonderstone Provision of teachers’ salaries 618 618
Wonderstone Communal lecture and training facility 593 593
16 459 15 070 31 529


Further detail of the expenditure on these projects is included in the “Sustainability report” located on the group’s website under “Annual reports” in the investor centre.

Independent trustees of Boleng and Fricker Road trusts


The Assore Employee Trust

Independent trustees of Assore Employee Trust


The Assore Employee Trust was established by Assore for the economic benefit of the non-managerial employees of the Assore group by facilitating their participation in the dividend income distributed by Assore (dividend rights) and also participating in the increase in the value of Assore’s ordinary shares listed on the JSE (equity rights). The beneficiaries of the Assore Employee Trust are full-time, permanent non-managerial employees of the Assore group, and exclude senior management and board members. The trust is overseen by a board of trustees, the majority of whom are HDSAs and is constituted as follows:

T Bizure‡^
Ms MC James‡#
GN Lavielle^
Ms NP Mngomezulu‡*
Ms WT Mnisi‡^
M Pillay‡*

HDSA trustee.
^Employee representative trustee.
#Founder trustee.
*Independent trustee.

During the 2015 financial year, the trust effected dividend rights distributions to employees totalling R10,7 million (2014: R10,1 million). An independent valuation performed as at 30 June 2015 indicates that the value of equity rights granted to employees amounted to R2,0 million (2014: R5,1 million) (refer note 17, “Share-based payment liability”, to the consolidated financial statements). The decline in the fair value is due to the reduction in the Assore share price from R356,66 at 30 June 2014 to R103,50 at 30 June 2015.

Preferential procurement

Assore is committed to bringing previously disadvantaged South Africans into the mainstream of the economy and the mining industry by identifying and developing business opportunities and by making them available to broad- based black economic empowered (BBBEE) suppliers at all its operations. Without compromising on quality, Assore has adopted a policy of precluding vendors who do not have valid empowerment credentials from supplying goods and services to its operations. A summary of the percentage BBBEE procurement measured against total discretionary procurement is presented in the table below:

Total Aggregate
discretionary BBBEE
procurement# expenditure* Aggregate
R million R million % BBBEE
Assmang 11 424,5 12 243,0 107,2
Rustenburg Minerals 198,9 187,0 94,0
Zeerust 79,9 71,2 89,1
Wonderstone 53,2 46,8 88,0
African Mining and Trust 72,5 77,9 107,4
Assmang 12 309,3 16 311,7 132,5
Rustenburg Minerals 273,3 136,4 57,5
Zeerust 34,0 18,7 55,0
Wonderstone 36,1 27,3 75,6
African Mining and Trust 84,8 84,3 99,4
# Total discretionary procurement is defined as total procurement less procurement effected through related entities (intercompany transactions).
* Aggregate BBBEE expenditure is recognised based on the respective recognition levels of the suppliers, in accordance with the codes published by the Department of Trade and Industry (dti).
Expenditure of levels 1 to 3 suppliers is recognised at more than 100% in terms of the dti codes.


The decline in the percentage of BBBEE expenditure within Assmang is due mostly to a lower level of expenditure in levels 2 and 3 (declines of 8,1% and 4,6% respectively), with corresponding increases in the lower levels (levels 4 to 8).

The recognition percentages for the group’s subsidiary companies have improved due to ongoing insistence by procurement staff to source from sufficiently empowered suppliers. The level of expenditure at Rustenburg Minerals and Zeerust is expected to decline due to reduced mining activity (refer here).

The amended dti Codes of Good Practice came into effect on 1 May 2015. These amended codes make provision for changes in the scoring methodology. All suppliers with a current verification certificate qualify as an empowering supplier for the validity period of the current certificate, resulting in the current results being maintained up to that date. An overall decrease in scores is, however, expected from 1 May 2016, as not all suppliers will be granted empowered status in the next verification and some suppliers will have lower ratings as a result of the introduction of the amended codes.