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 neworder rights). A transitional period from that 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 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 were obtained for the chrome operations in Rustenburg Minerals Development Company Proprietary Limited (Rustenburg Minerals) on the farms Groenfontein, Zandspruit and Vogelstruisnek.
  • 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) were registered in September 2015.
  • Pursuant to the acquisition from ARM of its effective 50% share in Dwarsrivier Chrome Mine, Assore owns 100% of Dwarsrivier Chrome Mine Proprietary Limited (DCM) with effect from 1 July 2016. The new-order right was registered on 30 June 2016 (refer note 36 to the consolidated financial statements for more detail).
  • 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. To date, the DMR has not reported any significant non-compliance issues.

Following the introduction of the MPRD Act Assore has, specifically at a holding company level, entered into empowerment-related transactions, which have resulted in HDSAs holding 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.

In terms of agreements between Assore and the trusts, the Fricker Road Trust qualified for dividends (after dividends tax) of R7,5 million (2015: R16,4 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 these 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 relationships between the respective 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 2016 financial year, and pursuant to the trust deeds, the trustees have approved expenditure on its major projects amounting to R13,8 million (2015: R9,6 million) and have committed themselves to spending a further R37,6 million on these and other projects, details of which are as follows:

Operation Description to date Commitment Total
R’000 R’000 R’000
Wonderstone Tsholonang Children’s Disability Centre 4 289 4 461 8 750
Boleng Trust Bridging school, and related expenditure 2 988 9 934 12 922
Student boarding facility at Ottosdal 2 411 2 500 4 911
Support of various student requirements, including bursaries and transport 2 066 9 293 11 359
Rustenburg Minerals Imfundo Likusasalethu, primary educational intervention 1 999 962 2 961
Other projects 10 450 10 450
13 753 37 600 51 353


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”.

Boleng and Fricker Road trusts

Independent trustees

Independent trustee
Independent trustee Independent trustee Independent trustee
Dr TG Sibiya K Makhaya M Mtshali TPJ Ngxulelo
PhD (IT&IS), Med (ISD), Pittsburgh, BSc (Information systems), Carnegie Mellon, USA BusAdmin (Finance), Gonzaga University, Washington BLaws, LLB, UCT


The Assore Employee Trust

Independent trustees of Assore Employee Trust

Independent trustee
Independent trustee Independent trustee
M Pillay NP Mngomezulu I Phalane
LLM (Duke, USA)

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 participation 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 who do not participate in pre-existing incentive schemes or performance bonus arrangements. Senior management and board members are precluded from participating in these benefits. The trust is overseen by a board of trustees, the majority of whom are HDSAs. The board of trustees is constituted as follows:

M Pillay‡* (Chairman)
T Bizure‡^
Ms MC James‡#
GN Lavielle^
Ms NP Mngomezulu‡*
Ms WT Mnisi‡^
I Phalane‡*

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

During the 2016 financial year, the trust made dividend rights distributions to employees totalling R6,2 million (2015: R10,7 million). The decrease in these distributions is due to lower dividends declared by Assore (2016 distribution: R5,00 per share; 2015 distribution: R7,50 per share). An independent valuation performed as at 30 June 2016 indicates that the fair value of equity rights granted to date to employees amounted to R9,6 million (2015: R2,0 million) (refer note 17, “Share-based payment liability”, to the consolidated financial statements). The increase in the fair value is due to the improvement in the Assore share price from R103,50 at 30 June 2015 to R180,01 at 30 June 2016.

Preferential procurement

Assore is committed to bringing previously disadvantaged South Africans into the mainstream of the economy and specifically 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^ 10 795,8 11 103,2 102,8
Wonderstone 46,0 45,1 98,1
Rustenburg Minerals 185,2 174,8 94,4
Zeerust 18,3 16,6 90,8
African Mining and Trust 58,5 66,1 112,8
Assmang 11 424,5 12 243,0 107,2
Wonderstone 53,2 46,8 88,0
Rustenburg Minerals 198,9 187,0 94,0
Zeerust 79,9 71,2 89,1
African Mining and Trust 72,5 77,9 107,4

The decline in the percentage of BBBEE expenditure within Assmang is due mostly to a lower proportion of level 3 expenditure (decline of 11,93%), with corresponding increases in levels 2, 4, 6 and 8.

The recognition percentages for the group’s subsidiary companies continue to improve due to ongoing insistence by procurement staff to source from sufficiently empowered suppliers. The expenditure in Zeerust declined significantly, due to the mine being placed on care and maintenance, while the expenditure in Rustenburg, Wonderstone and African Mining and Trust declined due to declining commodity prices in 2016.

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.

The new Nokuphile School, Midrand, a project of the Love Trust, funded by the group