Wits University associate professor William Mervin Gumede doubled down on his fake black ownership statistics at a BEE symposium at the Johannesburg Business School organised by the presidency and the BEE Commission last week.
The symposium was part of a process to review the country’s empowerment policies. I am part of a panel that was appointed by the department of trade, industry & competition to contribute towards this process.
Gumede said a bank had conducted a report for the Minerals Council in 2015 and found that 46 politically connected individuals had secured 60% of all BEE transactions in mining and became millionaires or billionaires overnight.
This is a fabricated statistic because Gumede twisted what the report said to further his anti-transformation agenda. Nowhere does the report, which was done by SNG Grant Thornton and RMB, say the BEE mining deals went to individuals or that they were politically connected people.
The two companies must disassociate themselves from Gumede’s misrepresentation of their findings. If Gumede understood empowerment finance 101 he would know there is a huge difference between gross and net value, and that in most cases nobody becomes “a millionaire or billionaire overnight” when they conclude a BEE transaction because there are huge debts to pay.
Many BEE deals do not ever transfer ownership to black people and others only transfer a fraction of gross ownership. Also, anyone who has interrogated the data knows that black ownership in the mining sector consolidated around three companies: Patrice Motsepe’s African Rainbow Minerals (ARM), Sipho Nkosi’s BEE Holdco and Royal Bafokeng Holdings (RBH).
Most of the black shareholders in these companies are not politically connected. I assume Gumede is not part of the fringe groups on the right who believe that all black people are politically connected.
There were four landmark BEE transactions in mining, according to a report I did on black ownership on the JSE for the Transformation Lens. In September and November 2003 there were two transactions worth R11.5bn that resulted in African Rainbow Minerals & Exploration Investments (ARMI), which represents Motsepe family interests, acquiring 43% of ARM.
Later, a broad-based trust acquired 13% of ARM. In October 2006 BEE Holdco acquired 53% of Exxaro in an R8.4bn transaction. In April 2007 Impala Platinum (Implats) decided to settle all future royalties that were due to RBH with a cash payment that was used to buy shares worth R15.4bn.
RBH is the investment company for the 130,000 members of the Royal Bafokeng Nation. In 2010 RBH listed Royal Bafokeng Platinum (RBPlat).
At the end of December 2014, ARMI, BEE Holdco and RBH accounted for about 80% of BEE net value in mining, according to an analysis I did at the time. Since then, RBH has exited its investments in Implats and RBPlat and acquired 6.9% of Northam Platinum.
In 2017 there was a replacement BEE deal at Exxaro after the unwinding of the 2006 transaction, with black shareholders now owning 30.8% of the company. At the end of December 2024 there was black ownership of R72.5bn in the mining sector.
This was equivalent to 8% of the value of South African mining assets on the JSE. Black ownership in ARM and Exxaro accounted for almost half of the total.
The biggest urban legend is that BEE has only benefited the politically connected few. While some politicians benefited from earlier deals, this is no longer the case. Today, there are very few politically connected black shareholders in the listed mining sector or the JSE.
At the end of 2024 broad-based ownership schemes accounted for two-thirds of black ownership on the JSE.
• Gqubule is an adviser on economic development and transformation.
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