Broad based black economic empowerment (BBBEE) is a policy of the South African government aimed at addressing past economic imbalances, stimulating further growth and creating employment. This policy is applied to the mining industry through the Minerals and Petroleum Resources Development Act (MPRDA) and the Mining Charter.
The Mining Charter required the holder of new order mining rights to achieve historically disadvantaged South African (HDSA) equity ownership of 26% by 2014. HDSA participation extends beyond ownership levels to employment equity, management and procurement spending.
BBBEE is measured across seven categories, namely:
Petra’s intention is to adopt a proactive strategy to foster and encourage BBBEE and transformation at ownership and management level, through skills development training, employment equity, procurement and rural development. The South African operations are fully BBBEE compliant from an equity ownership perspective – visit our Group Structure page for more information.
Implicit in the objectives of the MPRDA is the development of a broad-based socio-economic transformation strategy. The MPRDA makes provision for charters to be developed and adopted by the mineral and petroleum industry.
The Broad Based Socio Economic Empowerment Charter for the South African Mining and Minerals Industry 2004 (as amended in 2010) was issued in terms of section 100 (2) of the MPRDA (“the Charter”). The Charter required the holder of new order rights to achieve historically disadvantaged South African equity ownership of 15% by 2009 and 26% by 2014. The Charter is in the process of being reviewed and the amended Charter is likely to contain revised and more stringent targets.
Historically disadvantaged South African participation extends beyond ownership levels to employment equity, management and procurement spending. Mining companies are obliged to procure 40% of their capital goods, 70% of their services and 50% of their consumer goods from BEE entities. Mining companies are also required to ensure that workplace equity achieves a representation level of 40% for the historically disadvantaged South African demographic, with representation at all levels of management, and core and critical skills levels. The 2010 amendment to the Charter introduces the concept of suspension and forfeiture of mining rights in the event that a mining right holder fails to comply with these provisions as measured by a scorecard. It should be noted that before a mining right can be cancelled or suspended in terms of the MPRDA the requirements of administrative justice must be followed. This requires that a party who will be affected by an administrative decision should be given notice and a consultation procedure followed before the administrative decision that is likely to detrimentally affect their rights is taken.
In June 2017 the Minister of Minerals and Energy in South Africa published the Reviewed Mining Charter (“RMC 2017”). The Minister has undertaken not to implement RMC 2017 pending a court case by the Chamber of Mines in South Africa to interdict the implementation of RMC 2017.