IMPALA Platinum’s (Implats’s) black economic empowerment (BEE) at its flagship mining tenement near Rustenburg has dipped below 26%, after a large black-owned shareholder sold off part of its stake, casting doubt over the status of world’s second-largest platinum producer.
The decision by Royal Bafokeng Holdings to sell 5% of its stake in Implats, leaving it with 6.3%, has thrown the once empowered, always empowered dispute into stark relief.
The Bafokeng’s investment vehicle had owned 26% of Implats’s Rustenburg tenement and converted this to a 13.2% stake in the miner to give it a readily tradeable investment. Having declined to follow its rights when Implats issued R4bn of shares last October, reducing its stake to 11.3%, the Bafokeng gave a signal to the market that it would reduce its holding.
In the past 18 months Royal Bafokeng Holdings sold the 5% stake, with its CEO Albertinah Kekana declining to say to whom it had sold the shares or for what price.
The Implats share price has averaged R55.10 since October 2014 and has declined 48% over the 18 months since then. Assuming the average price, the Bafokeng would have netted R2bn from the sale.
"As part of Royal Bafokeng Holdings’ prudent approach to portfolio management, and in line with our ongoing diversification strategy, we have decided to reduce our shareholding in Implats," Ms Kekana said.
However, based on the Department of Mineral Resources’ interpretation of the Mining Charter, Implats would have to find another empowerment partner to raise the 8% in its empowerment structure at its Rustenburg tenement back to 26%.
Implats shares lost 3% on the news on Monday as investors fretted about whether the company would have to top up its empowerment levels, a decision that could dilute the existing shareholders.
This is precisely the matter taken to court by the Chamber of Mines on behalf of its members. The chamber wants a declaratory order that mining companies would not have to perpetually top up their black ownership levels to a minimum of 26% if deals were terminated.
The 5% sale equated to 8% empowerment ownership of the Rustenburg mining tenement, based on the agreement to convert the Bafokeng’s holdings to shares in the listed entity, said Johan Theron, group executive of Implats’s corporate relations.
"That 5% stake the Bafokeng have disposed of has given them a lot of cash, which they will use to optimise their investment portfolio and increase its value," Mr Theron said.
"The fact that the Bafokeng no longer owns that 5%, and instead holds a lot of cash, doesn’t detract from the fact that we’ve delivered that value into their hands to do whatever they want to do," he said.
"If we had known back then where we would be politically today, we could have, at the time, locked the Bafokeng in forever and told them they could never sell a share, but that’s hardly value transfer," he said.
The outcome of the court process to seek the declaratory order will have enormous financial consequences for Implats and its shareholders if the court decides in the department’s favour.
Implats said that large pension funds were invested in the company and, given the demographics of SA, this would mean a large number of indirect black shareholders in the company. The Public Investment Corporation, which manages government pensions is a 13% shareholder in Implats.
The chamber’s application for a declaratory ruling has been delayed by an application by lawyer Hulme Scholes and his firm, Malan Scholes, to combine the chamber’s application with his, which seeks to have the Mining Charter declared unconstitutional and void.
The parties are waiting for a ruling on the consolidation application from which the chamber is anxious to disassociate itself, arguing it had a good working relationship with the department on the rest of the charter, which it helped negotiate, and that it was seeking a ruling on one aspect of the charter.
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