Mineral resources & energy minister Gwede Mantashe has raised doubts over Sibanye-Stillwater’s BEE credits at its gold division, saying the company was "reckless" for talking about this in public and should approach his department.
Sibanye said in response that it had not spoken publicly about the matter and was in talks with the department about the renewal of its mining right at the Beatrix mine rather than its entire gold division.
Sibanye CEO Neal Froneman is the most outspoken mining executive in SA about what he considers to be wrong with the political leadership, economy and regulatory environment. He has spoken publicly about not investing in SA’s mining sector anymore because of what he sees as a negative or sometimes hostile environment for large, long-term capital projects.
Empowerment is a contentious issue in SA’s mining industry, with companies claiming credits stemming from past empowerment deals that may no longer be in place to meet their 26% black ownership target as set out in the first two mining charters since 2004.
Under Mantashe, a third iteration of the charter has been enacted and raises the ownership level to 30% and stops any transfer of empowerment credits when mining rights are sold or are renewed. The Minerals Council SA has lodged papers in court to contest this point.
The department dropped its appeal against a court ruling that past empowerment transactions could be claimed as credits under the first two versions of the charter.
Speaking at the 2020 Junior Indaba mining conference, Mantashe said it was "abnormal" for Sibanye to claim the 15% black ownership credential that underpinned the Gold Fields 15% BEE deal with Tokyo Sexwale’s Mvelaphanda Resources when "Tokyo’s not there".
It is highly unusual for Mantashe to single out a company as large and important as Sibanye — the world’s leading source of platinum group metals (PGMs) and SA’s second-largest gold miner — for such a stinging public rebuke and to confront it in such a way.
"Sibanye stole their rating in terms of BEE compliance," Mantashe said. "Neal Froneman expects to accept that as normal. It’s not normal."
Gold Fields unbundled its Driefontein, Kloof and Beatrix gold mines in 2013 to create the newly listed Sibanye.
Sibanye has gone on to use its gold assets to become the world’s top supplier of PGMs in four transactions since 2016.
"We think that Sibanye is reckless in handling a sensitive issue. They should talk to us. If they are not BEE compliant, there will be consequences like there are for any other person," Mantashe said.
"The using of the 15% shareholding of Tokyo in both Gold Fields and Sibanye is abnormal. We are ready to talk to Sibanye on that issue, but they are going public and opening a public debate on the matter, which is undesirable under normal circumstances," he said.
The department was willing to "go full distance" with Sibanye to argue against the use of the Mvelaphanda deal for its empowerment credits, Mantashe said. "It’s stretching the principle too far. We need discussions to resolve these issues because they’ll not disappear."
Gold Fields created a new subsidiary to hold the Driefontein, Kloof and Beatrix mines. Mvelaphanda raised R2.4bn of debt to pay for its 15% stake, which it successfully repaid over five years out of dividends from the subsidiary. Mvelaphanda then flipped the 15% stake in the unlisted subsidiary into a 9% stake in the listed Gold Fields company. Mvelaphanda unbundled those 50-million Gold Fields shares to its investors when it was wound down.
It was the Gold Fields subsidiary holding the three gold mines that was unbundled to create Sibanye, said Sibanye spokesperson James Wellsted.
"Legally, it’s the same company as the one that did the empowerment transaction in Gold Fields. Those credits stay with the entity, even if it’s in a different form," he said.
The Driefontein, Kloof and PGM mines all have long-life mining rights and do not need to renew their empowerment transactions, he said.
The department was pushing Sibanye to put a new empowerment transaction in place for Beatrix, but this was subject to the legal process in court initiated by the Minerals Council, and Sibanye was unwilling to consider the matter just yet, Wellsted said. "Beatrix needs to renew its title. That’s in contention," he said.
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